Acceleron Pharma Inc.
Q1 2018 Earnings Call Transcript

Published: 14 May 2018

[Operator:]

Good afternoon, ladies and gentlemen, and welcome to the Acceleron First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to hand the call over to Mr. Todd James, Vice President, Investor Relations and Corporate Communications at Acceleron. Please go ahead.

[Todd James:]

Thanks, Brian. And welcome, everyone, to our First Quarter 2018 Earnings Conference Call. The press release reporting our financial results, in addition to the presentation for today's webcast, are available on Investors & Media page of the corporate website at www.acceleronpharma.com. Joining me for the call today are Habib Dable, our Chief Executive Officer; Matthew Sherman, our Chief Medical Officer; Kevin McLaughlin, our Chief Financial Officer; John Quisel, our Head of Corporate Development, Sujay Kango, our new Chief Commercial Officer and Chris Rovaldi, our Head of Operations and Program Management. Our goal this afternoon is to provide an overview of our recent operational progress, along with reviewing our upcoming corporate priorities and updated financial results for the first quarter after that we look forward to taking your questions. As a reminder, we will be making forward-looking statements regarding our financial outlook in addition to regulatory and product development plans and research activities. These statements are subject to risk in uncertainties that may cause actual results to differ from those forecasted. A description of these arrests can be found in our most recent Form 10-K on file with the SEC. I'd now like to turn the call over to Habib Dable, our Chief Executive Officer.

[Habib Dable:]

Thank you, Todd and good afternoon everyone and thank you for joining us today. So we had a productive first quarter as 2018 kicks off an important period for Acceleron as we think about our long term vision for building our business and advancing our internally discovered medicines to patients with serious and rare diseases. The foundation of our vision starts with a strategic focus and therapeutic area leadership in areas of high unmet medical need and hematological, neuromuscular and pulmonary disease. We plan to build this therapeutic leadership by harnessing the power of TGF-beta biology to develop first-in-class or best-in-class medicines for patients. We and our collaboration partners Celgene continue to expand this luspatercept development in new chronic anemia opportunities. We are currently targeting five indications across multiple clinical trials and are evaluating additional lifecycle management prospects. Our wholly-owned neuromuscular franchise is uniquely positioned with both a local and a systemic muscle agent, that utilize our Myostatin+ approach to inhibit multiple TGF-beta proteins. In pulmonary disease, we are very close to initiating our first Phase 2 trial with sotatercept in pulmonary arterial hypertension or PAH. We continue to prepare for key upcoming luspatercept activities and remain fully committed to moving our clinical programs in to late stage development. Our entire team is focused on meticulous operational execution as we push toward our goals. To be a fully integrated by a pharmaceutical company by late 2019 and to have three programs in Phase 3 developments by the end of 2020. Turning to Hematology, patients diagnosed with Myelodysplastic Syndromes or MDS, v Beta-Thalassemia and Myelofibrosis currently have no approved medicines to treat chronic anemia, if successful luspatercept present with a cash of multi-billion dollar annual peak sales opportunity across indications. This year, we expect to have seven ongoing Phase 2 and Phase 3 clinical trials with luspatercept. Beginning with the ongoing MEDALIST and BELIEVE Phase 3 trials in patients with lower risk MDS, who are rings it robust positive or transfusion dependent beta-thalassemia we plan to release top line results in the middle of the year. The COMMANDS Phase 3 trial in first line lower risk MDS patients remained on track to initiate this quarter. The trial evaluates luspatercept treatment at the head-to-head superiority trial versus epoetin alfa. Enrollment and treatment are currently ongoing in the Phase 2 BEYOND trial in non-transfusion-dependent beta-thalassemia as well as the Phase 2 trial in Myelofibrosis. During the second quarter, we expect to present luspatercept update to presentations at the upcoming ASCO Annual Meeting and the European Hematology Association or EHA meeting in June. The ASCO Annual Meeting presentation titled have been released and abstracts are expected to be available on the ASCO website on May 16th. At ASCO, we plan to provide an update on the Phase 2 trial and MDS and there will also be a trial in progress poster outlining the design of the ongoing Phase 2 trial in Myelofibrosis. For EHA, we plan to distribute a conference roadmap press release to outline our Phase 2 presentations at the conference, once the out structure available on May 17th. Turning now to a neuromuscular franchise and beginning with ACE-083, our locally-acting Myostatin+ muscle therapy. We have achieved multiple milestones for the program year-to-date. Results from the double-blind placebo controlled Phase 1 healthy volunteer trial were published in the muscle and nerve journals of much issue. Earlier this year, we announced preliminary results from those cohorts one in two in part one of the ACE-083 Phase 2 trial in patients with FSHD, and presented you data last month during in oral presentation at the American Academy of Neurology 17th Annual Meeting in Los Angeles which was selected as part of the best of neuromuscular disease session. Notably, ACE-083 showed a favorable safety profile and was well tolerated and preliminary results demonstrated a total mean muscle volume increase of over 15% in the tibialis anterior and biceps brachii muscle at a 200 milligram dose We also observed improvements in overall muscle quality to absolute reductions in fat fraction. We plan to present final results from all part one cohorts in the second half of 2018. We recently initiated part two of the Phase 2 trial in FSHD which is a double-blind placebo controlled Phase 2 evaluate ACE-083 effect on functional outcomes after six months of treatment. We expect to report part two preliminary results during the second half of 2019. We also recently announced that the FDA granted ACE-083, Fast Track designation in FSHD. This is an important milestone for the program and it confirms the high unmet medical need for patients with that FSHD for which there are currently no FDA approved therapies. We are also developing ACE-083 in Charcot-Marie-Tooth or CMT disease, where we are currently advancing through part one of the Phase 2 trial and we expect to report full preliminary results from part one in the second half of 2018. We plan to initiate part two of the Phase 2 trial in CMT by the end of this year. Moving ACE-2494, our systemic Myostatin+ muscle agent is currently being evaluated in Phase 1 healthy volunteer trial. The randomized double-blind placebo controlled trial will enroll three single and three multiple ascending dose cohorts to evaluate safety, tolerability and pharmacodynamic in 60 subjects. We expect to report results from this trial during the first half of 2019. In Pulmonary, we recently highlighted the PAH are Phase 2 trial design during an educational webinar on March the 28th. To briefly summarize, the PULSAR trial design is a placebo-controlled double-blind Phase 2 trial. We plan to enroll 90 Functional Class 2 in 3 patients with PAH across three treatments. A control arm of placebo plus standard of care and a sotatercept low dose and high dose plus standard of care. The primary endpoint will be to assess pulmonary vascular resistance or PBR over a six month treatment period. Key secondary endpoints include 6 minute walk distance, clinical worsening, change in functional class and change in quality of life. We expect to initiate the PULSAR trial this quarter and report preliminary results in the first half of 2020. With that, I will now turn the call over to Kevin McLaughlin, our Chief Financial Officer, to run through the financials for the quarter.

[Kevin McLaughlin:]

Thanks, Habib and good afternoon everyone. Our cash, cash equivalents and investments as of March 31, 2018, were $353.3 million, this compares to December 31, 2017 cash, cash equivalents and investments of $372.9 million. As a reminder, we believe that our existing cash, cash equivalents and investments will be sufficient to fund our projected operating requirements into 2021. Collaboration revenue for the first quarter was $3.2 million. The revenue is all from our Celgene partnership and is primarily related to expenses incurred by the Company in support of luspatercept. Total costs and expenses for the first quarter were $30.8 million. This includes R&D expenses of $23.4 million and G&A expenses of $7.4 million. The Company posted a net loss for the first quarter ended March 31, 2018 of $26.2 million. I will now open the call to questions. Operator?

[Operator:]

Thank you, Sir. [Operator Instructions] Our first question will come from line of Carter Gould with UBS. Your line is now open.

[Carter Gould:]

Good afternoon, guys. Thanks for taking my questions. Two for me, I guess first can you talk about the did the rationale for the change in the design of part two of the FSHD study you I guess got to close during the quarter I believe in February which in three months treatment to a six month period and also added a follow-up period, why make those changes that from you, FDA, that imply any sort of change in your assumptions around the timeline which strength change of the strength might materialize. And then I guess just also looking back at the FSHD data at AAN and it's fairly heterogeneous population I guess any steps to maybe tighten that up when we think about the move to part two the study? Thank you.

[Habib Dable:]

Hey, Carter, this is Habib, thanks for your question. Yeah, so as we've mentioned we've initiated part two this study where we're going to be recruiting 56 patients, 28 patients in the TI group and as well as 28 in the biceps group again it's going to be a placebo-controlled study and as Carter you mentioned we are going to be looking at a six month endpoint. And I think you started to allude to some of the reasons why we would be considering that and maybe I'll pass it over to you Matt to kind of give some of the details in the specifics which led us to that.

[Matthew Sherman:]

Yeah. Thanks, Habib and hi, Carter. Yes so as we look at the program initially, we had some initial talks data that just for the first three months from now we will design of the trial if not the government programs as we do under terms 80 studies an animal models allows us to do more continuous a chronic dosing in patients and why we completed that during the early part of development give us the opportunity to redesign part two, to extend the PAH endpoint to six months so it gives us more confidence about the endpoint as well to ability and the endpoint of six months compared to the original design of a trial. Is that pretty, is that clear?

[Carter Gould:]

Yeah. And then just as far as the heterogeneity of the population and moving from part one to part two?

[Matthew Sherman:]

Yeah, it'll be very similar. Really we design - we normally think of heterogeneity in the populations so would be able to be great year for the study and we do require like also strength have thing for eligible for patients so they cannot be too strong and it cannot be too weak they really are just right. In addition, we also look for genetic confirmation disease or first relative who have disease of really never the population to be patient and so more homogeneous rather than just a wide grab at patients.

[Carter Gould:]

All right. Thank you.

[Operator:]

Thank you. And our next question will come from line of Geoffrey Porges with Leerink. Your line is now open.

[Geoffrey Porges:]

Thank you very much for taking the question and apologies if you might have mentioned this earlier in the call. I talking late but fundamentalists trial we've had quite a few questions about expectations for that trial and you've changed a few things from the Phase 2, the population, the prior treatment, the indulgence in C Pro level or slightly different as well as the duration of treatment, which the CBB - the quick response. So would you expect all of those various changes to increase the likely transfusion response rate or would it basically be neutral? Thanks.

[Habib Dable:]

Yeah, hey, Geoff, this is Habib. Thanks for your question. So there's a number of factors obviously we've done as much it's possible to try to minimize differences between Phase 2 in Phase 3. On in terms of what we could expect in terms of responses and with what we've done is we pretty much consistently anchor around two things, right. So when you look at one another study and a very similar group if you go back to the rebel image study the MDS-005 study which was looking at a very similar population and that data was presented about three years ago at ASH, where you saw that and this study which was designed very similarly to the MEDALIST study with perhaps one exception. And where the entry criteria for the MEDALIST we are looking at a minimum of forward but transfusion sorry for MEDALIST its two way but transfusions over the previous eight weeks and no transfusion independent over the previous 16, where they read the MDS-005 study actually had an eligibility criteria of four. Now, in that study you saw that the efficacy rate was 26.9% versus placebo of 2.5%. Now, the other marker, I would say if you look at our Phase 2 studies, we also looked saw in the original Phase study an efficacy rate of 39%. Now, you make a great point in that study you were looking at a 12 week period in terms of be the rolling TIs of eight weeks, where in the MEDALIST population, in the MEDALIST study were actually looking at a 24 week period. So you could arguably say, why wouldn't you expect to see more of a higher efficacy rate in your MEDALIST from 39% because of that window as an example of one of the changes. And we very well might, but you arguably could suggest that impact study just in drug development in general when you move from Phase 2 to Phase 3 when you get into larger and blinded-studies, placebo controlled, fix think tend to drift downwards, when you go from Phase 2 to Phase 3. So from our perspective, we would be a very much as a win if the efficacy came in somewhere between the 26.9% and 39% we would see that as a win. That's one example of some of the changes in where we see things falling out if indeed the trials are successful and what we would consider a win but Matt I don't know if you want to add anything to that?

[Matthew Sherman:]

Hi, Geoffrey. So yeah we're back in trial design study, the Phase 3 studying of the great deal confirmatory study for Phase 2 while clearly if no randomized, placebo-controlled trial and patient population very similar the endpoint of transition pennants was one that we have a lot of experience with these two and new chance of regulatory in Phase 3 which site were very similar [indiscernible] taking from some our leading sides go through Phase 2 studies as well as many experience from the outside really trying to decrease a lot of your variation of curse you're from Phase 2 to Phase 3 your confident from the struggles to Phase 2 data and that was the road well designed robust Phase 3 study.

[Geoffrey Porges:]

So Matt could I just follow-up on that would you expect the beta list population to be a little earlier in the disease course than the Phase 2 study given the fact that you've got a lower of intelligence in C Pro level and you're excluding probably lenalidomide?

[Matthew Sherman:]

I don't know if they're earlier it's just that a subset of the overall Phase 2 to patient population. In statement as you know we face the population with both for as positive or it's negative could that head prior of them a little more of those wider range of baseline EPO levels. And then consider the earlier in the disease those range from patients who have received prior EFAs - prior year level - yeah say therapy?

[Geoffrey Porges:]

Yeah, thanks, guys. That's very helpful and look forward to your results.

[Habib Dable:]

Great. Thanks, Geoff.

[Operator:]

Thank you. And our next question will come from line of Robyn Karnauskas with Citi. Your line is now open.

[Kripa Krishnamoorthy:]

Hey, guys. This is Kripa on for Robyn. I was just wondering if you've seen any safety concern in either the MBS or the way the Thal studies in the Phase 2 that you think could be an issue in the larger Phase 3 trials. And I had a follow-up question about FSHD?

[Matthew Sherman:]

Hi Kripa, so this is Matt, so we've described the Phase 2 safety for both MDS and thalassemia last year it several of the converses including each and as in December and as you feel very good about the safety profile just describe the best on the some of the drugs just indications. It's been actually quite stable cross different what sort of database over the last year so a number of either Phase 3 non-serious adverse events with a number of series of series adverse events, so that remain very much stable in those two patients populations and to-date now if you look at the total number of patients month experience that we know were in excess or a 1000 patients month for both the MDS me and the thalassemia patients population so. That's been the updates on the state we announce, nothing that we've been able to highlight that deviates from that?

[Kripa Krishnamoorthy:]

Okay, great. Thank you. And just a quick follow-up on FSHD, how should we be thinking about the regulatory process to approval for FSHDs there, any clarity you can provide is this Phase 2 trial that you're currently doing is there any likelihood of accelerated approval or do you expect to have to do a pivotal trial?

[Todd James:]

Hey, Kripa, it's Todd. So our basic plan is on successful completion of a part two would be to have a post Phase 2 meeting with the FDA and the plan would be to go ahead with the Phase 3 registrational study, there's always a chance if the Phase 2 comes out amazingly positive, that we can have a different interaction with the regulatory agencies that were to allow for expedited approval but the base case is that we have to move forward with a larger Phase 3 and discuss relevant endpoints without the agencies.

[Kripa Krishnamoorthy:]

Great, thank you so much.

[Todd James:]

Thanks, Kripa.

[Operator:]

Thank you. And our next question will come from Eric Joseph with JP Morgan. Your line is now open.

[Eric Joseph:]

Hey, guys. Thanks for taking my questions. Just the quick one here on and medical congress to Phase 2, this one if you can provide a little guidance on how we should be thinking about the number of those cohorts, when we get a look at part one data and the second half of the year particularly what you're focused on here relative to part one of that FSHD trial and is there sort of any reason to think you can move forward with a different there was some part two compare it to what you're doing a part two with that FSHD? Thanks

[Habib Dable:]

Yeah, so at this point expect to have a presentation at a medical congress in the second half of the year, we have to wait to see the results as far as each does cohort to decide what we're moving as part of the optimal dose into part two, it's as you know if this is a neuropathy versus FSHD being a myopathy, so there could be potential for efficacy at a different dose rate or just have to wait to see the results at this point.

[Eric Joseph:]

Got it, thanks.

[Operator:]

Thank you. And our next question will come from line of Christopher Marai with Nomura. Your line is now open.

[Christopher Marai:]

Thanks for taking my question, guys. I just have just a quick one maybe for Habib and first for I'm just wondering if you could maybe walk us through some of your preparations for the potential of the status of launch how we should think about the organizational clinical there with respect to marketing with luspatercept and greater ability of the rest your pipeline is wholly-owned? Thank you.

[Habib Dable:]

Yeah, hey, Chris. Thanks for your question so. I guess the first thing I would say is that the preparations for launch have been ongoing for a while now and we had with the establishment of the joint commercial committee. Just like every other part of those patterns that project we have been working very closely and have been intimately involved with our partners at Celgene as we prepare to bring with luspatercept patients and in terms of some of the specifics regarding the commercial part, there's been a number of activities that have been ongoing as we continue to learn more about the diseases that we're focusing on with the luspatercept our engagement with the patient advocacy groups and try to the tremendous amount of market research that's ongoing there is also work going on with payers in terms of understanding the payer mindset and the landscape that we enter into the space with it with an orphan drug. We also are spending a lot of time in understanding exactly what the necessary footprint is going to look like when we launch. As you know, I color on has the opportunity to co-promote in North America and we intend to do that we're working very, very closely with our partners in terms of one What is the necessary footprint to maximize the opportunity and then two what without look like for Acceleron versus Celgene and there is number of things that we're looking at right now with the one goal in terms of what it is going to take to make sure that we maximize the opportunity. That said, one of the other important parts of that preparation is it was recruiting a top commercial leader and bringing to Sujay Kango on board and perhaps they can pass it over to you if you get a few things based on some of your recent interactions with the drug commercial committees.

[Sujay Kango:]

Sure. Thank you, Habib and thanks for the questions. First and foremost as Habib said like we have joint committees that are working towards the preparation, our goal is to at least at this time point, we're anticipating launching both indications simultaneously. So the preparations going across that cohort of sort of really thinking about both the beta-thalassemia traders as well as the MDS traders and ensuring that we have a seamless a sort of launch to ensure maximal access to both patient groups that our number one priority. And the second aspect around it is we've got joint operational teams that are looking at every angle in relation to how do we ensure the rapid sort of launch in ensuring a quick uptake of this product once we do get a commercial and a regulatory approval around it. So elements around patient journey understanding where those special points are in relation to the leverage of what the patient needs are building those plans and programs to support the patient community as well as the physician community in relation to identifying the right patients are all the efforts that we are currently undertaking for optimal delivery of this product into the marketplace.

[Christopher Marai:]

Okay. Thanks for the color Sujay. In addition that I was wondering perhaps you could clarify how you look to detail this drug is one our specialist folks and then how do you look at MDS versus beta-thal obviously betal-thal is more a rare disease - is not informing your processes from a rare disease franchises that the company has? Thank you.

[Sujay Kango:]

That's the great questions. Some of the learning for applicability of how you approach beta-thalassemia as the rare or Ultra-red disease right could definitely apply to how we approach patient centric models in relation to our future franchises, so that's an important question and you sort of hit the nail on the head. It's all about patient sort of durability of the factor in ensuring that we are able to take care of them in relation to be our needs and then maybe some with their ability between the patient segments from MDS and beta-thalassemia and we are absolutely understanding that and ensuring that we provide the right resources to support the patients. Your other question was relating to specialty as to the audience right. So our target is going to be predominantly hematology oncology that are treating, there is some overlap between the beta-thalassemia, treaters and the MDS tweeters and we've identified that sort of intersection between those two physician groups and will certainly be sort of that's a small segment but we'll be covering that segment as well which is a common segment for both beta-thalassemia and MDS. But otherwise, they're largely different sort of physician audiences and we've mapped those out and of course Celgene has tremendous insight on the MDS population given their presence in the MDS fields. So we relay a lot on our existing expertise so to speak to build on it and have a have a national footprint across both audiences.

[Christopher Marai:]

Great, thank you.

[Sujay Kango:]

Thanks, Marai.

[Operator:]

Thank you. [Operator Instructions] And our next question will come from Kennen MacKay with RBC Capital Markets. Your line now open.

[Unidentified Analyst:]

Hi, good afternoon. This is Flanax [ph] on for Kennen. Congrats on the progress and thanks for taking the question. A question on FSHD start, I was wondering if we look toward the second half readout what sort of function of improvement, are you looking forward that would make you comfortable in terms of advancing the potential registrational Phases because part of the color on that and then I have follow-up question as well? Thank you.

[Habib Dable:]

Yeah. Hey, Flanax. This is Habib. I just wanted to make sure that we clarified, I think you mention the second half readout FSHD, that the second half of 2019 to be clear, right?

[Unidentified Analyst:]

Yeah. That's right.

[Habib Dable:]

Okay. So as you know part one of the study was really designed to look at safety, tolerability in muscle mass we were thrilled to be able to see a dose response and to see that in higher doses that we were able to get a 15% increase in muscle mass and disease muscles and at the same time, the safety, tolerability of the drug continued to be favorable to the point that we've initiated the part two of the study. We equally were thrilled with the fact that the help authority the FDA had granted us a Fast Track which obviously it is a great testaments to the unmet need that we're trying to address with ACE-083. With respect to part two of the study which will readout in the second half of 2019 again this is the study that being resigned to be able to see if we translate this increase in muscle mass into a meaningful functional benefit. And so if you look back at some of the other studies that have looked at strength in function, we've seen that with a 5% to 6% increase in muscle mass in some of the studies could translate into a functional benefit where we think that if we could actually show a benefit of somewhere around 10% or more in functional benefit in a minute walk distant, 10 meter walk et cetera. That could be a meaningful benefit to patients and that will be looking for in part two the study and Matt, anything to add to that?

[Matthew Sherman:]

No, no. I think actually covers as well, we'll be look into proportional and point to each of those muscles will being tested, so different tests for the body as well as for the [indiscernible] and we're currently evaluating those test on part one, but we'll certainly be testing them in the part two as part of the study.

[Unidentified Analyst:]

Great, thanks, Habib and Matt for that color. And if I could have to ask the question on –for sotatercept PAH program. As we think about the trial that starting in terms of the standard of care options that the tattered stuff will be tested on top of it is there any specifications in terms of whether it be double-therapy or triple-therapy or in light of kind of the evolution of the treatment paradigm towards triple-therapy and what sort of PBR bar would you say you're looking to the past?

[Habib Dable:]

Yes, Flanax, I'm going to pass the question over to John Quisel.

[John Quisel:]

Yeah, hey, how are you? Thanks for the question. So what's the story of the back end of your question we're looking for probably 20% increase would be considered quite meaningful and on top of the standard of care therapy and in terms of what we're allowing into the trial, we are allowing both the double and the triple therapy so it is truly on top of standard of care and we intend to design a trial to capture the evolving approach to treatment these patients will be increasingly aggressive visit later therapy and I think the one thing we really do look for that in each case the patients reach the stable point with their with their dosing of the medicine so we're not looking at us as a shifting background.

[Unidentified Analyst:]

Just to be clear that the 20% improvement in PBR over standard?

[John Quisel:]

Yes, apologies, right improvement, yeah of course.

[Unidentified Analyst:]

Okay, great. Thanks for the color.

[John Quisel:]

Great, thank you, Flanax.

[Operator:]

Thanks you. And I'm showing no further questions at this time. So now, I'd like hand the conference back over to Mr. Habib Dable, Chief Executive Officer for some closing comments and remarks.

[Habib Dable:]

Great, thanks everybody for your time and for your continued interest in our company and if there's any further questions please feel free to reach us through our Vice President of Investor Relations, Todd James and look forward to seeing those of you that will be at EHA and so enjoy the rest of the evening. Thank you very much.

[Operator:]

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.