Acceleron Pharma Inc.
Q2 2015 Earnings Call Transcript

Published: 6 Aug 2015

[Operator:]

Good day, ladies and gentlemen and welcome to the Acceleron Second Quarter 2015 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 follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now turn the call over to your host, Stephanie Ascher. Please go ahead.

[Stephanie Ascher:]

Thanks and welcome, everyone to Acceleron’s second quarter earnings conference call. The press release reporting our financial results in addition to the presentation for today’s webcast can be accessed by going to the Investors and Media Section of the corporate website at www.acceleronpharma.com. On the call today with prepared remarks are John Knopf, Chief Executive Officer; Steven Ertel, Chief Operating Officer; Matthew Sherman, Chief Medical Officer; and Kevin McLaughlin, Chief Financial Officer. As a reminder, during today’s call, we will be making forward-looking statements regarding our financial outlook in addition to regulatory and product development plans. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent Form 10-Q on file with the SEC. I would now like to turn the call over to Steve.

[Steven Ertel:]

Thank you, Stephanie. Good morning, everyone, and thanks for joining us today. I am proud to report that we delivered strong performance in the first half of 2015 that builds momentum for significant value creation opportunities in the second half of the year. We’ve made excellent progress in our operations, advancing all of our clinical stage programs. Starting with our lead hematology program, Luspatercept, we completed enrollment and treatment in our Phase 2 dose escalation study in myelodysplastic syndromes or MDS and patients are now enrolling in our long-term Phase 2 extension study in which Luspatercept is ministered for months of treatment. In the Luspatercept Phase 2 dose escalation study in patients with beta-thalassemia, we are nearing complete enrollment. As dosing is completed in that study, eligible patients are enrolling in a 12-month Phase 2 extension study. These 12 month dosing studies will provide useful data regarding the long-term activity of Luspatercept for the treatment of MDS and beta-thalassemia. For the dalantercept program, we are enrolling patients in the 130-patient randomized placebo controlled part of the Phase 2 study of dalantercept in combination with axitinib in advanced renal cell carcinoma patients. Our fourth clinical program ACE-083 is a molecule that is designed to selectively increase muscle mass and strength in the muscles into which it’s administered. We’ve completed enrollment and treatment of healthy volunteers in the Phase 1 clinical trial. Now turning to our clinical data, we are very excited by the promising results recently presented across several of our pipeline programs. At the European Hematology Association's Annual Meeting in June, we and Celgene, our collaboration partner for the luspatercept program presented new Phase 2 data that further supports the advancement of luspatercept to Phase 3 clinical trials in both MDS and beta-thalassemia. Additionally, at the ASCO Annual Meeting in June, we presented Phase 2 data from the dalantercept trial in renal cell carcinoma or RCC showing that the combination of dalantercept, axitinib across all three dose levels of dalantercept tested generated a meaningful improvement in the median progression free survival or PFS late across the historical PFS data recorded for axitinib used as monotherapy. Moving now to regulatory matters, we have had many positive interactions with the U.S and European health authorities during the quarter. The FDA granted Fast Track designations to luspatercept for two separate indications, the use of luspatercept for the treatment of patients with transfusion dependent beta-thalassemia and the use of luspatercept for the treatment of patients with non-transfusion dependent beta-thalassemia. We and Celgene jointly had numerous scientific advice and pre-Phase 3 meetings with U.S. and European health authorities regarding our luspatercept programs. These meetings and the feedback we’ve received have laid the groundwork for the initiation of luspatercept Phase 3 clinical trials in MDS and beta-thalassemia by year end. At this point, we can communicate that in beta-thalassemia based on the data we’ve obtained and the diverse needs of patients with this disease, we and Celgene are planning two Phase III studies, one in patients that are transfusion dependent and the other in patients that have anemia but are not transfusion dependent. One of these studies is expected to initiate this year and the other to follow soon thereafter. Now, let me mention our newer programs. We are actively working to expand our pipeline of wholly-owned clinical stage programs beyond the dalantercept and ACE-083. In the second quarter, we made exciting progress on several promising pre-clinical programs with initial focus on protein therapeutics designed for systematic administration to increase muscle mass and strength. We expect to present data on the first of these pre-clinical muscle programs at the Congress of the World Muscle Society in late September. Acceleron’s research organization continues to be highly productive. All four of our clinical stage programs were discovered internally at Acceleron and we are currently achieving an even higher level of productivity based on some remarkable discoveries made in our research organization. We are truly excited by the wealth of new product opportunities that we see ahead of us and John Knopf will talk about these later in this presentation. Lastly, I’m pleased to announce that we have recently hired Todd James [ph] as our Head of Investor Relations. Todd brings a decade of investor relations experience and I look forward to Todd starting at Acceleron next week. At this point, I would like to turn the call over to Matt Sherman, our Chief Medical Officer who will provide an update on our luspatercept program in MDS and beta-thalassemia, and our dalantercept program in renal cell carcinoma.

[Matthew Sherman:]

Thank you Steve. In our discussion today, I will review the exciting progress of our luspatercept and dalantercept programs. I will start with the review of the significant progress we’ve made with luspatercept in MDS. As Steve mentioned, we’ve completed enrollment in treatment of all patients in the luspatercept Phase 2 dose escalation study. This is an important milestone achievement for Acceleron and the results we obtained from this study set the stage for advancing program to Phase 3. We have an additional ongoing trial in MDS which is the Phase 2 extension study for those patients that participated and completed three months dose escalation study. These patients can receive up to 12 months of luspatercept which will allow us to evaluate the long-term efficacy and safety of luspatercept treatment in patients with MDS study is also fully enrolled at this point. We presented the first set of data from the 12-month extension study at the EHA meeting June showing durable and sustained periods of transfusion independence. Of the 14 MDS patients who received red blood cell transfusion for at least two units in the running period prior to the start of treatment six or 43% of patients achieved transfusion independence for at least eight weeks with a median 23 weeks without transfusion as of the data cutoff date. All six of these patients were continuing to receive treatment as of the date of cutoff and so these periods of transfusion independence may continue to lengthen. We look forward to providing updated data for the duration of response later in the year. We and Celgene are also very encouraged by the progress we have made with luspatercept for the treatment of patients with beta-thalassemia. Treatment is ongoing in both the luspatercept Phase 2 dose escalation study as well as the 12-month Phase 2 extension study in both transfusion dependent and non-transfusion dependent beta-thalassemia patients. I will summarize the data from these studies in a moment, but as an indication of the quality of the data we’ve generated and the potential of luspatercept to address the significant unmet medical of beta-thalassemia patients, we recently received the FDA’s Fast Track designation for luspatercept in the both the transfusion dependent and non-transfusion dependent beta-thalassemia patient population. The Fast Track program of the FDA is designed to facilitate the development and expedite the review of new drugs that are intended to treated serious life threatening conditions that demonstrates potential to address unmet medical needs. The designation also provides the opportunity for more frequent FDA interactions over the course of the development program and will allow us to submit sections of the DLA on a rolling basis as they are finalized. This designation will be helpful as we and Celgene prepare to initiate Phase 3 studies in transfusion dependent and non-transfusion dependent beta-thalassemia patients with the study in transfusion dependent patients on track to begin later this year and the other soon thereafter. We have been meeting with US and European health authorities to finalize the Phase 3 programs in both of these patient groups. As with our MDS program, there is a lot of exciting momentum building towards the start of these pivotal studies in beta-thalassemia. Now, turning to the clinical data, at the EHA meeting, we presented data from the transfusion dependent beta-thalassemia patients enrolled in our Phase 2 studies. 10 of the 14 patients we treated for at least 12 weeks and were evaluable for changes in transfusion burden. And all 10 of these evaluable patients luspatercept generated at least a 40% reduction in transfusion burden over 12 weeks. This is a clinically meaningful decrease in transfusion burden and is generating a lot of excitement in the clinical community. Luspatercept is the only drug therapy in development that has been shown produce the type of hematologic effect, particularly based on the simple subcutaneous injection once every three weeks. We look forward to providing updated data for the duration of response later in the year. We have also been making good progress with our ALK1 pathway inhibitor dalantercept for the treatment of renal cell carcinoma. At ASCO, in June, we presented an encouraging preliminary data from the dose finding part 1 of the DART study and ongoing Phase 2 clinical trial with dalantercept in combination with axitinib in patients with advanced renal cell carcinoma. Axitinib is an improved VEGF receptor tyrosine kinase inhibitor and by combing dalantercept with VEGF receptor TKIs we expect to achieve superior anti-tumor activity for patients. The data from part 1 of the DART study highlight encouraging progression-free survival of PFS with the combination of dalantercept plus axitinib in advanced RCC patients. The combination of dalantercept and axitinib plus all three dose levels of dalantercept tested generated the median PFS of 8.3 months in patients with second through fourth line RCC. The median PFS has not been reached for the 0.9 milligram per kilogram dose group which has been chosen as the dose level for the ongoing randomized placebo controlled part 2 stage of the study. The aggregate PFS of 8.3 months compares favorably to the PFS of 4.8 months reported from the Phase 3 AXIS trial of axitinib as monotherapy in the treatment of second line patients. We are now enrolling patients in Part 2 of the DART study, which is designed as a randomized placebo controlled study in 130 patients, where patients are randomized between dalantercept and axitinib versus placebo and axitinib. We expect that the results from this study will be available in the second half of 2016. I’ll happy to answer questions during our Q&A, but next I’ll turn the presentation over to Kevin McLaughlin to discuss our financials.

[Kevin McLaughlin:]

Thanks, Matt. For the second fiscal quarter ended June 30, 2015, Acceleron’s cash, cash equivalents and investments were $156.6 million. As of December 31, 2014, the Company had cash and cash equivalents of $176.5 million. Acceleron expect that its balance of cash, cash equivalents and investments will be sufficient to fund the Company’s operations into the second half of 2017. For the three months and six months ended June 30, 2015, collaboration revenue was $5.7 million and $10.1 million respectively compared to $4.1 million and $7.4 million respectively for the same period of 2014. All of the revenue in all periods was derived from the Celgene agreement. Costs and expenses were $18.8 million and $38.3 million for the three and six months ended June 30, 2015. This compares to $21.4 million and $36.9 million for the three and six months ended June 30, 2014. It should be noted that the three and six months ended June 30, 2014 expenses included a one-time $5 million litigation settlement expense. Research and development and general and administrative expenses increased on a quarter and year-to-date basis when compared to the prior year, primarily due to an increase in clinical development and personnel-related expenses. The Company’s net loss for the three and six months ended June 30, 2015 was $10.4 million and $25 million respectively compared with $16.6 million and $25.7 million respectively for the same periods of 2014. I’ll now turn the presentation over to John Knopf, our CEO.

[John Knopf:]

Thanks, Kevin. As you can see, it’s been a very productive year-to-date and we have a number of important milestones still to come. I’ll start by saying how excited I am to announce that we will host our first Research and Development Day for investors on October 23 in New York City. Acceleron was founded with a mission to rapidly discover and develop innovative therapeutic candidates based on our unique insights into the growth and repair systems for various cells and tissues in the human body. This is a powerful area of biology and Acceleron has pioneered novel approaches to build a growing pipeline of important therapeutic candidates in this space. At our R&D Day, we will review our entire clinical state pipeline with a particular focus on luspatercept and the planned Phase 3 programs in MDS and beta-thalassemia. We will review the Phase 3 trial designs and discuss the unmet medical needs and commercial opportunities that we and Celgene are targeting with luspatercept. With regard to dalantercept, we will provide an update on our studies in RCC and our ongoing studies in patients with hepatocellular carcinoma or HCC. Looking earlier in the pipeline, we will introduce our broad commitment to developing a suite of therapeutic design to increase muscle mass and strain. We believe this is an enormous opportunity spanning a broad array of diseases, each with substantial unmet medical need. Moreover, given our long experience in this area and the emerging importance of myostatin and other members of TGF-beta superfamily as targets in the treatment of muscle disease, Acceleron is well positioned to be a leader in this exciting field. Also, at R&D Day, we will for the first time unveil preliminary topline results from the Phase 1 study of ACE-083, our locally acting muscle agent in healthy volunteers. We will discuss our strategy for ACE-083 development and our comprehensive approach to advancing this unique agent alongside other systemic approaches to treat muscle diseases. Finally, the R&D day will be an opportunity to introduce a new proprietary technology platform that we’ve been advancing within our research organization. This platform is already enabling us to assemble novel molecules with enhanced target specificity and unique pharmacologic properties. We will review data from the first candidate that we have identified through this approach, currently named ACE-2494, a systemic muscle agent, which we plan to bring into the clinic next year to bolster our growing muscle franchise. We believe this technology platform could potentially translate into a new wave of clinical candidates in muscle disorders and other areas of tissue restoration over the next few years. It promises to be an exciting day and I am really looking forward to it. In addition to R&D Day, we expect to deliver on other milestones before year-end. We will present data from ACE-2494 at the World Muscle Society’s 20th International Congress beginning on September 30th. We also expect to present new and updated results from our ongoing studies of luspatercept for the treatment of MDS or beta-thalassemia at a major scientific meeting later this year. And finally, we expect to initiate the first Phase 3 clinical trials with luspatercept in MDS and beta-thalassemia by the end of this year. This will be a transformative moment for the company. I’ll close today by looking ahead to 2020. These next five years will continue to be very productive and very exciting. Our goal is to have approvals in five indications and have eight distinct therapeutic candidates in clinical trials. Importantly, by 2020, we aim to be cash flow positive and have a US sales and marketing organization. We believe we are on track to build one of the world’s great biotechnology companies. Thank you very much for your attention. I would now like to open the call to questions. [Operator Instructions] Our first question comes from the Kennen MacKay with Citigroup. Your line is open.

[Kennen MacKay:]

Hi, thanks for taking my question. I was wondering if you could also provide an update on when we might see data from sotatercept in the CKP [ph] trial and just give an update on how that trial was going through?

[John Knopf:]

Hi, Kennen, this is John Knopf here. At present we are conducting the Phase 2a part of this study, which is a dose and regimen study comparing both IV and subcu and we can update you on where that is at our R&D day.

[Kennen MacKay:]

Okay, terrific, thank you. And then regarding luspatercept in beta-thalassemia, would be further advancement of gene therapy, so I was wondering sort of how you could sort of elaborate a little bit on sort of how the profiles may differ and sort of what patient populations do you think would be eligible more for luspatercept versus gene therapy if that does wind up [indiscernible]

[John Knopf:]

All right. Steve, do you want to take that?

[Steven Ertel:]

Sorry, I am not sure I understood the question. Kennen, would you just – we’re just focused on which patient population.

[Kennen MacKay:]

Oh, I am sorry, in beta-thalassemia.

[Steven Ertel:]

Right. So in beta-thalassemia, our plans going forward are largely consistent exactly, but we described today and as Matt just refreshed. So we are looking at essentially a full spectrum of patients with beta-thalassemia ranging from those with non-transfusion dependent patients, we do expect to have a Phase 3 study specifically in that group as well as in those patients who are transfusion-dependent and have a separate Phase 3 study in the transfusion-dependent beta-thalassemia study. End points are by and large consistent with what we – the guidance we have given to-date and as JK just – as John just described, we will describe those studies in more detail at the R&D Day.

[Kennen MacKay:]

Got it. Okay, thank you very much. And looking forward to the R&D Day.

[Operator:]

Our next question comes from Ted Tenthoff with Piper Jaffray. Your line is open.

[Ted Tenthoff:]

Great, thank you very much, and congrats on the Congress this summer, looking forward to some of you guys this fall as well. And just with respect to the CKP study that Celgene is currently conducting, can you walk us back through sort of what the update, what the next data readouts are from that? And when can we get final data and what next step should be, thanks very much for sotatercept?

[John Knopf:]

Sure, this is John Knopf again. As I mentioned, we have a, if you recall, we are in a Phase 2 study, there is two parts to that study. The first part of that study is comparing both subcutaneous and IV administration. And that study is nearing complete enrolment at this point, I believe and again, we can provide you with more update at the R&D day in terms of the next steps, then the next steps would be to start the larger study and again, we plan to start that study by the end of the year, but the data coming out from the dose escalation study will really be limited to looking at the red blood cell response in large part and that is what’s dictating our PD profile.

[Ted Tenthoff:]

Great. That makes a lot of sense. Thanks.

[Operator:]

Our next question comes from Mike King with JMP Securities. Your line is open.

[Mike King:]

Hey, guys. Good morning. Couple of questions. Apologies in advance if I’ve asked questions that have been answered already as I’ve had a number of earnings calls going on this morning. Just heard you guys talking about the R&D Day and wanted to ask just whether we’ll see some more detail about just sort of what molecular change do you made to 083 that allow it to act in a local fashion?

[John Knopf:]

Hi, Mike. This is John Knopf. We haven’t decided how much we’ll elaborate on that at the time, but certainly, it will be a focus of our presentation.

[Mike King:]

Okay. Have all the patents been squared away on 083, is that part of the reason why you may not want to tell on that?

[John Knopf:]

Yeah. That’s of course always part of the reason, but again, at R&D Day, the focus will really be on the clinical data.

[Mike King:]

Okay. Alright. Well, maybe transitioning to that, just wondering, I mean I know you guys have talked about indications with focal, where muscle may be deteriorating or weakened focally, just wondering you do less DMD as a potential indication for 083, just wondering if perhaps you can share your thoughts about, will these be some types of DMD or other manifestations of DMD that you would consider 083 for?

[John Knopf:]

Again, we had listed DMD as the possibility, there are certainly some situations where we could provide benefit to those patients, but what I would really like to do is, why don’t we wait till our R&D day and then we can talk really about why you’re developing a locally acting muscle agent and why you are developing a systemic agent, where it won’t be useful and the other would be better, but I think we prefer to wait to that time. Once we present our clinical data in 083, talk about new product that will be a systemic muscle agent and where we will use each of those, but it’s probably best just to wait till that point in time and we look forward to doing that.

[Mike King:]

Yeah. Fair enough. And then, alright, so switching quickly to Luspatercept, has there been anything in terms of the dialog with regulators that has either reaffirmed your thoughts about the approval blend points or where things may have been after view that go beyond the current scope of the Phase 2 trials, or I’m speaking specifically about MDS now?

[John Knopf:]

Right. So for MDS, I think earlier on, we’ve talked about that the end point would be transfusion independence in these patients and we’ve had excellent meetings with the regulatory agencies. I think we’ve been very much aligned with them as we’ve discussed over the year and remain so and both we and Celgene are very excited about getting that Phase 3 study started this year.

[Mike King:]

Okay, great. Thanks for taking my questions.

[John Knopf:]

And again, Mike on this, we can be a little more forthcoming with the details of the particular protocol and all those sorts of things at the R&D day once -- and that’s probably the most appropriate time to do that.

[Mike King:]

Right. Got you. Okay. Thanks a lot.

[Operator:]

[Operator Instructions] Our next question come from David Lebowitz with Janney Capital. Your line is open.

[David Lebowitz:]

Thank you very much for taking my question. Will you be able to provide any update on dalantercept in cancers beyond RCC?

[John Knopf:]

Yeah. So, again, John Knopf again, we expect to provide an update on HCC certainly in addition to RCC at the R&D Day.

[David Lebowitz:]

Might that be new data or as far as what incrementally could we see versus what we saw last year, I think?

[John Knopf:]

So far, let’s see, so for RCC, there would probably not be substantial new data. I think we would, although this would be for the first we will discuss our ongoing HCC study.

[David Lebowitz:]

Sure. Thanks for taking my question.

[John Knopf:]

Sure.

[Operator:]

And I am showing no further questions. I will now turn the call back over to John Knopf for closing remarks.

[John Knopf:]

Well, great. I’d like to thank everyone for participating today and look forward to seeing many of you at our R&D Day.

[Operator:]

Thank you. Ladies and gentlemen that does conclude today’s conference. You may all disconnect and everyone have a great day.