Acceleron Pharma Inc.
Q4 2014 Earnings Call Transcript

Published: 2 Mar 2015

[Operator:]

Good morning and welcome to the Acceleron Fourth Quarter and Year-End 2014 Conference Call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session at the end. Please be advised that this call is being recorded at Acceleron’s request. I’d now like to turn the call over to Acceleron. Please proceed.

[Renee Leck:]

Good morning. This is Renee Leck with Stern Investor Relations and I would like to welcome you to Acceleron’s fourth quarter 2014 conference call. You can listen to a live webcast or a replay of today’s call by going to the Investors and Media section of the website, acceleronpharma.com. A copy of today’s prepared remarks can also be found on the website. For today’s call, John Knopf, Acceleron’s Chief Executive Officer, will provide an update on the company’s pipeline, clinical plan and R&D efforts. Then Kevin McLaughlin, Chief Financial Officer, will review the company’s financial results and then we will conclude the call with a Q&A session. Matthew Sherman, Chief Medical Officer; and Steven Ertel, Chief Business Officer will also be available for the Q&A session. Before we begin, I would like to remind you that today’s discussion will include statements about the company's future expectations, plans and prospects that constitute forward-looking statements for the purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. I would now like to turn the call over to John Knopf.

[John Knopf:]

Thanks, Renee. Good morning, everyone, and thanks for joining us today. I’m extremely proud of Acceleron’s accomplishments in 2014. It was a highly productive year during which we made great progress advancing and expanding our business by building one of the most impressive internally discovered and developed multi-product pipelines in the industry. We have a great mix of partnered and wholly-owned programs and we believe we are working with the world’s best partner in hematology, Celgene, for our sotatercept and luspatercept programs. To put the progress we have made and our numerous accomplishments of 2014 into perspective, I will begin this call by describing the data that we had at the beginning of 2014, while summarizing what we have to look forward to this year, including some exciting clinical updates and presentations at major medical meetings. We began last year with just a glimpse of encouraging data from the earlier, lower dose escalation cohorts from our first beta-thalassemia clinical trial. We did not yet have data from our clinical trails in myelodysplastic syndromes or from our clinical trial in chronic kidney disease patients on hemodialysis. Over the course of the year, we generated a substantial amount of encouraging data in both beta-thalassemia and MDS such that the luspatercept data in patients with MDS was awarded a Best of ASH designation by the American Society of Hematology at its annual meeting in December. Based on these exciting data, Celgene announced its intent to initiate phase 3 clinical trials in beta-thalassemia and MDS in 2015. Additionally, we presented encouraging preliminary data with sotatercept in chronic kidney disease patients on hemodialysis showing that sotatercept was able to slow the progression of vascular calcification and improve bone mineral density. With our dalantercept program, we observed a favorable safety profile when combining dalantercept with axitinib, an approved VEGF receptor tyrosine kinase inhibitor, in patients with renal cell carcinoma. Just this past weekend, we presented data indicating the combination of dalantercept and axitinib produced response rates and a progression-free survival rate that exceeded the axitinib monotherapy data from its phase 3 trial. Finally, we expanded our pipeline by initiating a phase 1 clinical trial with a new molecule, ACE-083, a locally acting agent intended to increase muscle mass and strength. I would now like to summarize the data we have recently presented and how we intend to build on the momentum generated by this encouraging preliminary data. For the luspatercept and sotatercept programs, we and our collaboration partner, Celgene, presented impressive data from our MDS trials at ASH in December that demonstrated that these molecules increased hemoglobin levels and established transfusion independence in lower risk MDS patients. Importantly, we identified potential biomarkers to select patients most likely to respond to luspatercept treatment. This clinical trial was designed as a two-stage study. The first stage was a dose escalation design and the second stage, the expansion stage, allows each patient’s dose of luspatercept to be titrated to maximize the potential clinical benefit for that patient. We have now fully enrolled this luspatercept phase 2 clinical trial in MDS patients, which is a great accomplishment for our clinical organization. This puts us in a strong position to continue to rapidly advance our program in MDS with Celgene. We are in a similarly strong position with our program in beta-thalassemia. In December, we presented promising data in beta-thalassemia patients showing that luspatercept increased hemoglobin levels, reduced transfusion burden, improved measures of iron overload and led to a rapid and thorough healing of several patients’ leg ulcers. We believe these clinical benefits provided by luspatercept suggest this program has the potential to be disease-modifying across a broad spectrum of beta-thalassemia patients. We are developing luspatercept for both the most heavily transfused patients as well as for those who may receive only a few or no transfusions at all and have no other treatment option to manage their disease. We believe the very convenient and accessible form of treatment, a once every three week subcutaneous injection, will be well-positioned to potentially benefit the broadest spectrum of patients around the world who suffer from beta-thalassemia. I’ll now like turn to another opportunity, chronic kidney disease, the third indication in our comprehensive set of clinical trials with Celgene. During the course of the year, Celgene generated data demonstrating sotatercept could positively affect several important clinical complications, increasing hemoglobin levels in end-stage renal disease patients in the absence of erythropoiesis-stimulating agents, and attenuating the vascular calcification and bone disease that commonly occur in patients with chronic kidney disease. We are particularly excited by positive effects of sotatercept on bone mineral density and vascular calcification as there is enormous unmet need to treat these serious and life-threatening complications. I would now like to focus our discussion on our wholly-owned dalantercept program. This weekend we reported new preliminary data from the DART study, an ongoing phase 2 clinical trial of dalantercept in patients with advanced renal cell carcinoma, or RCC. The preliminary data from part 1 of the DART study were presented in an oral session by Dr. Martin Voss, from the Memorial Sloan Kettering Cancer Center, at the American Society of Clinical Oncology 2015 Genitourinary Cancers Symposium. In the DART trial, dalantercept is being evaluated in combination with axitinib, an approved VEGFR tyrosine kinase inhibitor in patients with advanced RCC, who have progressed on one or more VEGFR tyrosine kinase inhibitor and no more than three prior treatments. In other words, these were second to fourth line patients and all had failed one prior VEGF therapy. Three cohorts each received dalantercept either at 0.6 mg/kg, 0.9 mg/kg or 1.2 mg/kg subcutaneously once every three weeks and axitinib 5 mg orally twice a day for each 21 day cycle. According to RECIST criteria, across all doses of dalantercept tested, the combination of dalantercept and axitinib generated an objective response rate of 25%, and the preliminary mean progression-free survival is 8.3 months. The median PFS of the 0.9 mg/kg dose, the dose we have chosen to take into part 2 of the study based on its safety and efficacy profile, has not yet been reached. For reference, in the axitinib AXIS phase 3 study of 2nd line RCC patients, in the large subgroup of sunitinib-refractory patients treated with single-agent axitinib, the objective response rate was 11.3% and the median progression-free survival was 4.8 months. We believe the dalantercept combination data demonstrate an improvement to the historical axitinib single-agent data. Based on these data from part 1, we’re now enrolling patients in the randomized, placebo-controlled part 2 of the DART study. These data from part 1 of the study are encouraging and provide the basis for our optimism for the ongoing part 2 of the DART clinical trial. We’re also proud to have brought yet another internally discovered therapeutic candidate into clinical trials in 2014. ACE-083 is an innovative molecule designed to increase muscle mass and strength selectively in the muscles in which the drug is administered. The drug has been engineered to remain primarily within the specific muscles and/or muscle groups into which it is administered, and to be rapidly inactivated upon reaching the systemic circulation, resulting in what is expected to be a localized effect and an advantageous safety profile. The phase 1 clinical trial is ongoing and we look forward to providing an update on the initial data from this trial later in the year. We’ve had a very productive and successful year in terms of advancing and expanding our pipeline, but we also had a good year in terms of adding knowledgeable and experienced industry executives to our Board. This year, Terrence Kearney and Francois Nader joined the Acceleron Board of Directors. Terry has more than three decades of global healthcare experience at major pharmaceutical and life sciences companies including Hospira, where he held the roles of Chief Financial Officer and Chief Operating Officer. Terry also serves as the Chair of the Audit and Finance Committee and member of the Management Development and Compensation Committee for Vertex Pharmaceuticals. Francois served as the President and Chief Executive Officer and a member of the Board of Directors of NPS Pharma through the recent acquisition of NPS by Shire. Both bring valuable insight and experience to help us continue to build our business as we enter into the late stages of clinical development and begin planning for the commercialization of our most advanced programs. As you can see, 2014 was a very productive year for Acceleron and I want to thank everyone involved in these accomplishments including our investors, employees, Board members, clinical investigators and most of all, the patients who have participated in our clinical trials. I’ll now turn the call over to our CFO, Kevin McLaughlin.

[Kevin McLaughlin:]

Thank you, John, and good morning everyone. The company closed the fourth quarter and year ended December 31, 2014 in a strong financial position which will allow us to continue to advance all of our clinical programs and research. The company’s cash balance at the end of 2014 was $176.5 million, which increased from year-end 2013 balance of $113.1 million as result of our first quarter 2014 follow-on stock offering. We expect that our cash and cash equivalents will be sufficient to fund the company into the second half of 2017. As we have discussed in the past, our partner Celgene is responsible for 100% of all financial costs associated with the sotatercept and luspatercept programs. Our net cash operating burn supports company operations and the ongoing and planned clinical trials for the company’s fully owned programs. I will now turn the call back to John Knopf.

[John Knopf:]

Thanks, Kevin. These numerous accomplishments in 2014 set the stage for what we expect to be transformative 2015 for Acceleron. I would like to spend a few minutes describing how we plan to build on the positive momentum generated in 2014 and carry that forward in 2015. Let’s start with our work on MDS. At the end of next month, at the International Symposium on MDS, we and Celgene will present new clinical data from the luspatercept and sotatercept phase 2 clinical trials in patients with lower risk MDS. We and Celgene are excited about the potential for MDS and have begun to work to start on the phase 3 programs in MDS by the end of this year. Together with Celgene, we will seek health authority advice to support our plan to start the phase 3 study trial by the end of this year. Following our meetings with health authorities, we’ll be in a position to more fully describe our phase 3 program in MDS. In beta-thalassemia, we expect to present new clinical data in just a few months at the European Hematology Association’s Annual Congress. Similar to our plans in MDS, we and Celgene plan to hold meetings this year with health authorities to agree on the phase 3 program in beta-thalassemia and to start a phase 3 trial by the end of this year. I am extremely proud that Acceleron is now in a position to have not just one but two phase 3 programs in two distinct diseases by the end of the year and both in collaboration with the world’s leading hematology company, Celgene. We are very excited by the potential of bringing important new therapeutics to MDS and betathalassemia patients. In chronic kidney disease, new data from the ongoing sotatercept program in chronic kidney disease will be presented at the European Renal Association – European Dialysis and Transplant Association, known as the ERA-EDTA Congress, in London in May. From a clinical operations perspective, we expect Celgene to initiate the randomized, controlled stage of the ongoing phase 2b clinical trial in patients with end-stage renal disease by the end of this year. For the dalantercept program, we are enrolling approximately 130 patients across nearly 50 sites in the U.S. in the randomized, placebo-controlled stage of the phase 2 clinical trial in patients with advanced renal cell carcinoma. We also have continued to advance our phase 2 clinical trial of dalantercept in combination with sorafenib in patients with hepatocellular carcinoma. For our novel muscle program -083, our goal is to complete the ongoing phase 1 clinical trial and initiate a phase 2 clinical trial by the end of the year. In addition to all of this, our preclinical research efforts remain robust and productive. We remain on track to bring our fifth internally discovered therapeutic candidate into human clinical trials next year. Clearly, 2015 will be an exciting year for Acceleron as we accelerate and expand the development of existing clinical programs and grow our pipeline with innovative new therapeutic candidates to advance toward our vision of becoming a fully-integrated, multi-product drug discovery, development and commercialization company. Thanks and we can now open the call to any questions.

[Operator:]

Thank you. [Operator Instructions] Our first question is from Yaron Werber of Citi. You may begin. Our next question is from Howard Liang of Leerink. You may begin.

[Howard Liang:]

Thanks very much for taking my question. I have a – maybe a first question is on the dalantercept update over the weekend. Can you talk about discontinuation, overall discontinuation due to averaged events and specifically discontinued by dose? I was just wondering how discontinuation contributed to the better PFS for the dose that you’re taking to phase 2.

[John Knopf:]

Sure, thanks, Howard. Matt, would you take that question, please?

[Matt Sherman:]

Sure. Hi, Howard, this is Matt Sherman, and thanks for the question. So in the part 1 of the study with the combination of dalantercept and axitinib, as you know, it was a dose-escalating study starting at 0.6 milligrams per kilogram, going up to 0.9 milligram per kilogram and 1.2 milligram per kilogram. At the highest dose level, 1.2 milligram per kilogram, we did see a few more cases of fluid retention, or edema, that were in some patients controlled with dose reductions and in some patients controlled with diuretics that also led to a few patients with discontinuations. So in that case, that activity at the higher dose level was limited in part by those patients coming off study. Therefore, we went back and added additional patients at the 0.9 milligram per kilogram dose level and were able to demonstrate in fact, that those patients continued to tolerate the combination very well, continued on study. And as we showed, had a very good response rate and also a very favorable progression-free survival rate.

[Howard Liang:]

Thanks. Regarding the upcoming data at the MDS meeting and ERA-EDTA meeting, can you talk about what additional data, in terms of number of patients or nature of data, the incremental data that we’ll see relative to ASH and ASN presentations?

[John Knopf:]

Yeah, Steve, do you want to take that question? Because it involves both presentations from Acceleron as well as Celgene.

[Steve Ertel:]

Sure. Hi, Howard, this is Steve Ertel, so thanks for the question. So at the upcoming ERA-EDTA meeting, we will be presenting data from the ongoing sotatercept study in chronic kidney disease patients on hemodialysis. We will give more specifics in terms of the presentations and the data at the time the abstracts are released, which will be a few weeks in advance of the meeting.

[Howard Liang:]

Thank you.

[Operator:]

Thank you. Our next question is from Ted Tenthoff of Piper Jaffray. You may begin.

[Ted Tenthoff:]

Great, thank you very much. I’m encouraged by the data with axitinib and dalantercept over the weekend. Just thinking at – maybe on timing of that, how long do you think it would take to enroll the part 2 of the study? And when do you think we could see data? And what are kind of the larger plans for dalantercept globally? Is this something that you would anticipate partnering, especially with potential for liver cancer data readout maybe in Asia?

[John Knopf:]

Matt, do you want to take the first part of that? And then, Steve, could follow up the second part?

[Matt Sherman:]

Yes. Hi, Ted, again, it’s Matt, and again, thanks for the question. So our plan right now is to complete enrollment for the part 2 of the dalantercept plus axitinib randomized phase 2b trial in the first half of 2016. This study is 130 patients being randomized in a one-to-one fashion between dalantercept plus axitinib versus placebo plus axitinib. Then we expect we'll have a data readout from that study in the second half of next year.

[Ted Tenthoff:]

Great. And just remind me on the dose there.

[Matt Sherman:]

And the dose that we selected to take forward is the 0.9 milligram per kilogram dose level of dalantercept.

[Ted Tenthoff:]

And that’s because of the edema?

[Matt Sherman:]

And that was the best-tolerated combination of dalantercept and also showed significant activity in terms of response rates and progression-free survival. And then, of course, the axitinib dose is per the FDA label of 5 milligrams, twice a day.

[Ted Tenthoff:]

Okay, thanks.

[Steve Ertel:]

And, Ted, thanks for the question. This is Steven Ertel regarding collaborations related to dalantercept. So as Kevin McLaughlin mentioned earlier, our plans currently for cash utilization that take us into the second half of 2017, assume we continue to retain throughout that entire time frame, the wholly-owned program of dalantercept without partnering it. Our view is that we are very confident, especially now, based on the data that was just presented this weekend in this program, and want to continue to drive that program ourselves as quickly as we can. We certainly are open to speaking with folks, but we have no immediate plans to partner this program at this time.

[Ted Tenthoff:]

Okay, great, helpful. Thanks, guys.

[Operator:]

Thank you. Our next question is from Yaron Werber of Citi. You may begin.

[Unidentified Analyst:]

Hey, guys, this is Kennon [ph] on for Yaron. Sorry for that mishap earlier. I had two questions. First, I was wondering if the SF3B1 mutations would be incorporated potentially into your phase 3 program moving forward? And then I also had a question on MDS and whether you’d be including your biomarker moving forward? And potentially how that would be incorporated into a phase 3 strategy? Thank you.

[John Knopf:]

Okay. Steve, do you want to take that?

[Steve Ertel:]

Sure. Hi, Kennon [ph], it’s Steve Ertel again. So the data you are referring to, just for everyone’s benefit, was data we presented at ASH in December in which we had shown using two different markers, one sort of cell-based marker, if you will, and the other being a genetic marker. And both of these markers, which are related to one another and actually the mechanism of sotatercept and luspatercept, demonstrated higher response rates in those that were positive for each of those markers, or either of those markers, than patients who were negative. In terms of additional data there and how we use those findings potentially to influence our phase 3 program, that is something we’re very interested in, in active discussions with Celgene and plan to speak with health authorities on the best way to incorporate those into our phase 3 programs. We haven’t yet settled on that plan, but we’re certainly encouraged by these findings and think they have the potential to play an important role in the phase 3 studies.

[Unidentified Analyst:]

Got it. And just very quickly, can you remind us what percentage of the MDS population those – either both the mutation and the ring sideroblast sort of encompasses?

[Steve Ertel:]

Right. So about 80% of patients with ring sideroblasts have an SF3B1 mutation. And we think about anywhere from 25% to 40% of all patients are RS, or ring sideroblast, positive. So the numbers between SF3B1 and RS are pretty similar, and about 25% to 40% of all MDS patients are RS positive.

[Unidentified Analyst:]

Great, thank you very much. And congrats again on the dalantercept data. Thank you.

[John Knopf:]

Okay.

[Operator:]

Thank you. Our next question is from Mike King of JMP Securities. You may begin.

[Mike King:]

Good morning, guys, thanks for taking the question. Quick follow-up on the dalantercept data. I’m curious – I know that the PFS has not been reached yet in that dose group. Matt, could you remind us how many patients are still on the 0.9 mg/kg group? And I guess depending on when they reach mean PFS, where do you think you may be able to present that data?

[Matt Sherman:]

Hi, Mike, thanks. It’s Matt Sherman. And so we currently, as we presented the data at the ASCO GU meeting this week end, we have seven patients who remain on the study overall. Of those seven patients, four had been assigned to the 0.9 milligram per kilogram dose level. And so those patients continue on as well. And we don’t have any plans yet when we’d be able to update the data. As you know, this type of analysis is a time-to-event analysis. So actually have to wait. If patients have an event, such as progression, then that would drive when the analysis would be available for updating.

[Mike King:]

Okay, and then I want to just ask you for EHA, remind us, I know that you’re in the dose expansion now for luspatercept in MDS. What in general terms might you be able to present at EHA from the MDS population in terms of duration of therapy, dose reductions, hemoglobin increases, transfusion dependency et cetera?

[John Knopf:]

Yeah, Matt, I think – do you want to take that?

[Matt Sherman:]

Yeah, so let me continue and answer you. And let me clarify, so for the luspatercept MDS study which was designed let’s think about it as a two part study, a dose escalation part, which we completed as well as a dose expansion…

[John Knopf:]

Expansion, right?

[Matt Sherman:]

…expansions, which we added an additional 31 patients, which is also been fully enrolled. So as JK indicated earlier in his comments, we’re very pleased with the progress that we very rapidly enroll those additional 31 patients, and now that’s also completely enrolled as well too. So the total data set here is 58 patients and there’ll be an update from that data that we’ll be able to present at the EHA meeting in June. Now these patients continue on for an initial three months of treatment and then they can continue on beyond that for an additional one year of therapy. So it will be rolling data from the first 58 patients that will be available for EHA in June.

[Mike King:]

Okay, and Matt, you have at least an update on the number of patients that have chosen to go into the open label extension.

[Matt Sherman:]

Yes, of course, yes. And we’ll be to provide that information as the patients who are continuing on therapy as well.

[Mike King:]

And then Matt, as long as we’re talking about EHA, what kind of data might be available for beta-thal?

[Matt Sherman:]

So for beta-thal the study was designed similarly and we have completed the dose escalation part of that study and we have now opened the expansion cohort. Those patients are being enrolled. We are continuing to enroll additional patients since that. So similar to MDS, we’ll be able to provide the status of enrollment and an update on the data compared to what we’ve presented previously at ASH at the end of last year.

[Mike King:]

Approximately, how many patients do you think?

[Matt Sherman:]

Can’t say an exact number right now, but the enrollment has gone well. It started a little later than the MDS study so was not quite fully enrolled but we expect we’ll make very good progress and we probably able to report on that in EHA.

[Mike King:]

Okay. And then one final question, just regarding the CKD vascular calcification study, is that going to be an end point in sotatercept study in ESRD?

[Matt Sherman:]

Yeah. So we have spoken about this in a number of ways to talk about our belief in the data that we present at the ASM last year, which will be updated at the ERA-EDTA meeting in June this year. And in the ongoing sotatercept and CKD study in patients on hemodialysis, we were able to demonstrate not only a benefit in the hematology response but also a slowing of progression of vascular calcifications and an improvement in bone mass in those patients. And we believe that those could be very meaningful benefits for patients and could drive further developments of sotatercept in that patient population. Again, continuing to complete this study and we’ll initiate a very large randomized, over 200 patient study in patients which will be a control of ESA parts control study. So from that study that we expect to being this year, we’ll be able to have a dataset that could position us for finalizing what the phase 3 endpoints will be.

[Mike King:]

Okay, but to incorporate vascular calcification you have to have I assume you have to have your end of phase 2 with FDA before you figure out how that gets incorporated?

[Matt Sherman:]

What we’re doing right now – so we don’t need, yeah I mean, yes, end of phase 2 prior to phase 3 we’ll have that discursion with the FDA.

[Mike King:]

Great. Thanks, Matt, and thanks to everybody.

[Operator:]

Thank you. [Operator Instructions] Our next question is from David Lebowitz of Janney Montgomery Scott. You may begin.

[David Lebowitz:]

Hello, thank you very much for taking my question. First, when I look at the DART data from this past week and it seems to be that the 0.9 mg/kg group might have seen a better efficacy than the 1.2 mg/kg group. I’m just wondering, what might be a driver of this effect, could it be something do with the interaction with axitinib, just curious to hear.

[John Knopf:]

Yeah. Matt, do you want to take that?

[Matt Sherman:]

Yeah, sure. Hi, David, it’s Matt. And I think there is couple of ways of thinking about this. So, first as I mentioned earlier, I mean, a couple of occasions 1.2 had a drop off because of the full retention that was seen and again early in any clinical trial and thus get us a less experience with investigational drugs and although take the path of least resistance, just continue with patients. I don’t think there is any mechanistic reason why 0.9 should be more attractive than 1.2, other than it was very well tolerated. As Martin Voss indicated at the ASCO GU presentation. This is really the first time that a VEGF inhibitor in kidney cancer has been combined with another agent and has been very well tolerated and continues to show activity. So I think that point is very important that that’s a major advance for dalantercept. In terms of the PFS not being reached for 0.9, with the overall of 8.3 that’s still a very favorable advance compared to the historical AIXS axitin data. And we’ll just see where the analysis takes us when we have more events for the 0.9 patients.

[David Lebowitz:]

Okay, sounds good. If we look towards the part 2 of the trial, considering that it’s going to have 130 patients. I guess, what would be the prospects of, if that data comes out strong enough that it could be the basis of an FDA submission itself. What would we have to see, if the answer to that first part is yes, what would we have to see for that to be case.

[Matt Sherman:]

Yes. So I think, our base case would be that this is a phase 2 study. We’ll get positive outcome from the study and then move on to a phase 3 pivotal trial. We don’t yet want to speculate what big of a treatment effect we could see in this trial that would allow us to be used as registration trial, but that’s surely going to be just driven by the data.

[David Lebowitz:]

Thanks for taking my questions.

[Operator:]

Thank you. I’m showing no further questions at this time. I’d like to turn the conference back over to John Knopf for closing remarks.

[John Knopf:]

Well, great. I’d like to thank everyone for participating today and we very much look forward to updating you on our progress in the upcoming months. Thanks again.

[Operator:]

Ladies and gentlemen, this concludes today’s conference. Thanks for your participation. Have a wonderful day.