Acceleron Pharma Inc.
Q3 2015 Earnings Call Transcript

Published: 5 Nov 2015

[Operator:]

Welcome to Acceleron's Third Quarter Conference Call. [Operator Instructions]. I would like to introduce your host for today's conference Mr. Todd James, Senior Director of Corporate Communications at Acceleron. Sir, please begin.

[Todd James:]

Thanks and welcome everyone to Acceleron's third 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, we will make forward-looking statements regarding 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, Todd. Good morning everyone and thanks for joining us today. I am proud to report that we delivered strong operational performance during the third quarter as we're making excellent progress across our entire pipeline. Starting with our lead hematology program, Luspatercept, we have now completed enrollment in our Phase II dose escalation studies in myelodysplastic syndrome and beta-thalassemia patients. We continue to treat MDS and beta-thalassemia patients in our long term Phase II extension studies in which Luspatercept treatment is given for an additional 24 months. These multiyear studies will provide useful data regarding the long term activity Luspatercept in patients with MDS and beta-thalassemia. We and our partner Celgene are committed to exploring potential benefits of Luspatercept across a broad spectrum of MDS patients. In addition to the Phase III clinical trial, we have an ongoing Phase II clinical trial and lower risk MDS patients that are either ESA treatment naive or are RS negative. This enables us to further our understanding of the potential of Luspatercept in these patients of the MDS population. For the Dalantercept program we continue to enroll patients in the 130 patient randomized placebo controlled part of the Phase II study in combination with axitinib in advanced renal cell carcinoma patients. Encouraging response rates, PFS and overall survival data from part one have generated strong investigator interest in the ongoing part 2 phase of the study and we expect initial data to be available bid end of 2016. For the sotatercept program, we and Celgene decided to refocus our clinical development strategy from CKD dialysis to treatment of predialysis CKD patients. We and Celgene plan to have discussions with health authorities in the first half of 2016 to help to inform our trial design in this predialysis setting. I would now like to review the recently announced Phase I results for our muscle program ACE-083. ACE-083 is a molecule designed to selectively increase muscle mass and strength when delivered locally to target muscle groups. We reported an unprecedented 14.5% mean increase in muscle volume in healthy subjects compared to other investigational therapeutic agents. Based on these exciting results, we're planning to initiate a Phase II trial in facioscapulohumeral muscular dystrophy or FSHD in mid-2016. On the regulatory front, I am pleased to report that the FDA granted fast track designation to Dalantercept in combination with axitinib for the treatment of patients with advanced renal cell carcinoma or RCC following treatment with one anti-angiogenic agent. Now let me turn to the efforts under way within our research organization. Our highly productive research organization continued its efforts to expand our pipeline of internally discovered wholly owned clinical stage programs. Our efforts have begun to pay off with the introduction of an exciting new drug discovery platform, IntelliTrap. The IntelliTrap platform has already generated several new therapeutic candidates including ACE-2494, a systemic muscle therapeutic. We presented preclinical data on ACE-2494 at the 20th International World Muscle Society Congress in late September. Acceleron aims initiate its first clinical trial of ACE-2494 by the end of 2016. The large, diverse and expanding Acceleron pipeline contains a mix of partnered and numerous wholly owned programs. We're building the company's capabilities to enable us to bring several new preclinical programs into the clinic and look forward to sharing more information on these programs as they progress. 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 Phase III study designs in MDS and beta-thalassemia, Dalantercept, sotatercerpt and our ACE-083 program in muscle.

[Matt Sherman:]

Thanks, Steve in our discussion today, I'll review the significant advances we made across all four of our clinical programs. I'll start with a review of our Luspatercept development plans in MDS and beta-thalassemia. We and Celgene plan to initiate Phase III trials in both indications before the end of the year. This is an important milestone achievement positioning, Acceleron closer to becoming a fully integrated biotech company. I would like to now review the details of our Believe study in beta-thalassemia. The Phase III Believe study will enroll 300 patients in beta-thalassemia who require regular transfusion. The studies are a randomized, double-blind, placebo-controlled design. The randomization will be two to one in favor of Luspatercept. Based on a positive Phase II result we're pleased that we have had production interactions with global health authorities on the Phase III end points. The primary efficacy analysis of the Phase III Believe study is the proportion of patients who have a reduction of transfusions of at least 33% at the end of six months. As a secondary end point patients will also be analyzed at 12 months to establish the durability of the effect. Now I'll turn to the Luspatercept program and MDS in the Phase III Medalist study. This Phase III trial enroll 210 patients of very low to intermediate risk of ring sideroblast positive MDS who require regular red blood cell transfusions. Patients will be randomized two to one to Luspatercept versus placebo. Patients will either have previously failed treatment with an erythropoiesis stimulating agent or ESA or are ineligible to receiving ESA since they are unlikely to respond to an ESA. The primary efficacy analysis which is consistent with previous registration studies is red blood cell transfusion independence of six months with a secondary analysis evaluating the durability of response. Now moving on to ACE-083. Ace 083 is our locally delivered muscle agent that we have designed to deliver muscle mass and strength. We're currently conducting a Phase I study in healthy volunteers. It is a double-blind randomized placebo-controlled dose-escalating study to evaluate the safety and tolerability of a single dose or two doses of ACE-083 as a local muscle injection. The initial five cohorts of subjects received either ACE-083 or placebo injected into the right [indiscernible] muscle of the quadriceps. As we announced at our recent R&D day, the administration of ACE-083 generated up to 14.5% mean increase in muscle volume in treated subjects. This far exceeds increases muscle volume 2% to 8% achieved with other investigational therapeutic agents. We plan to enhance ACE-083 into a Phase II study in facioscapulohumeral muscular dystrophy or FSHD by mid-2016. FSHD is a form of muscular dystrophy that affects approximately 19,000 people in the United States for whom there are limited therapeutic options. At our R&D day presentation, we provided an overview of the need for locally active muscle agents and cited as examples a number of disorders where an agent such as ACE-083 might be beneficial including FSHD and Duchenne muscular dystrophy, conditions that can result in localized muscle weakness. I would now like to discuss Acceleron and Celgene's strategy for sotatercept. We observed that sotatercept increases red blood cell number, improves bone marrow density and reduces vascular calcifications in end stage renal disease patients. More recently we have noted a decrease in fibrosis in preclinical studies of chronic kidney disease. Collectively these findings prompted us to refocus our strategy in predialysis patients to better align the preclinical and clinical activity. And importantly, this predialysis population is much larger and there is a preferred reimbursement environment for this group of patients. Our plan is to meet with health authorities in the first half of 2016 to design a trial with Celgene and predialysis chronic and diseased patients. We have also been making excellent progress with our ALK-1 inhibitor Dalantercept for the treatment of renal cell carcinoma. We continue to enroll patients in part two of the DART study, a randomized placebo-controlled study of 130 patients. Patients are randomized between Dalantercept plus axitinib versus placebo plus axitinib. We expect that results will be available in the second half of 2016. The data from part one the DART of the study highlighted an encouraging progression free survival or PFS, for the combination of Dalantercept plus axitinib RCC patients. A combination of Dalantercept and axitinib across all three dose levels of Dalantercept tested generated a median PFS of 8.3 months. The 25% response rate of the combination of Dalantercept plus axitinib we observed was also encouraging compared to the single-agent axitinib response rate of 11.3% reported in the access trial. In addition, using the Kaplan-Meyer estimate the 12 month progression free survival rate was 39% for the combination of Dalantercept and axitinib which again compares very favorably to the 25% PFS rate reported for axitinib. As an indication of the potential of Dalantercept to address significant unmet medical need, we recently received FDA's fast track Dalantercept in combination with axitinib for the treatment of patients with advanced renal cell carcinoma following treatment with one anti-angiogenic agent. The fast track program of the FDA is designed to facilitate the development and expedite the review of new drugs that are intended to treat serious or life threatening conditions that demonstrate potential to address unmet medical needs. This designation also provides the opportunity for more frequent interactions with FDA over the course of the development program and allows a sponsor to submit sections of the BLA on a rolling basis as they are finalized. I'll now turn the presentation over to Kevin McLaughlin our CFO to discuss our financials.

[Kevin McLaughlin:]

Thanks, Matt. For the third fiscal quarter ended September 30, 2015, Acceleron's cash, cash equivalents and investments were $148.1 million. As of December 31, 2014, the company had cash and cash equivalents of $176.5 million. Acceleron expects 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 ended September 30, 2015, collaboration revenue was $4.2 million compared to $3.5 million in the same period of 2014. All of the revenue in both areas was derived from the Celgene agreements. Total costs and expenses were $18.8 million for the three months ended September 30, 2015. This compares to $14.9 million for the three months ended September 30, 2014. Research and development and general and administrative expenses increased on a quarter 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 months ended September 30, 2015 was $11.9 million compared with $8.0 million in the same period 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. We have a number of important milestones still to come. Before we discuss the upcoming events and go to Q&A, I'd like to talk about our new discovery platform, IntelliTrap. We're very excited to generate highly selective and innovative molecules. The first compound out of this the IntelliTrap platform, ACE-2494 is systemic muscle agent and we presented preclinical study results on ACE-2494 earlier this year at the World Muscle Society. We're targeting end of 2016 to initiate clinical trials. On our October 23 R&D day in New York City, we provided an in depth overview of many of our internally developed programs along with our Celgene partner program. We're pleased by the positive feedback we've received on the event, acknowledging the progress made to date and the excitement of the opportunities that lie ahead. Turning to our upcoming 2015 milestone and events, we will present both clinical and preclinical sotatercept data at ASN this week in San Diego. In just about a month we expect to present new and updated results of study for Luspatercept for the treatment of MDS and beta-thalassemia at major scientific meeting. And in December in Paris we'll present additional detailed results from our Phase I study of ACE-083 at the Sarcopenia, Cachexia and Wasting Disorders Conference. Finally we expect to initiate the first Phase III clinical trials with Luspatercept and MDS and beta-thalassemia by the end of this year. This in particular will be a transformational moment for the company. Lastly, while Phase III trials are under way we have an additional ongoing trial in MDS and beta-thalassemia including the Phase II extension studies for those patients who participated in the completed three-month dose escalation and expansion study. These patients can receive an additional 24 months of Luspatercept which would allow to us evaluate the long term efficacy and safety. We expect to be able to provide updates on these trials about every six months at major medical conference. These updates will also eventually include data from two additional cohorts in the ongoing study that are either ESA treatment naive or negative for ring sideroblast. I'll close today 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 eight distinct therapeutic candidates and clinical trials. Importantly, by 2020, we aim to be cash flow positive and have a U.S. sales and marketing organization. We're on track to build one of the world's great biotechnology companies. I want to thank you very much for your attention and I would now like to open the call to questions.

[Operator:]

[Operator Instructions]. Our first question is from Mike King of JMP Securities. Your line is open, sir.

[Mike King:]

I just want to do ask about the abstracts that are out tomorrow and I just want to ask you to help us understand what the data cutoff dates would be for your abstracts submitted to ASH.

[Matt Sherman:]

So as you say, the ASH abstracts will be coming out tomorrow and we will be giving an update in for both the MDS and for the thalassemia programs beyond when we presented last June at EHA. So the data cutoff actually brings us into late summer time.

[Mike King:]

Okay. For the abstracts. Will you present updated data beyond what's in the abstracts by the time we arrive at the meeting?

[Matt Sherman:]

Yes. That's our plan.

[Mike King:]

Okay. Can you give us any more specifics or would you rather wait for the abstracts to--

[John Knopf:]

Yes, no I think by the guidelines that ASH imposes on the presenters that we have to wait until the actual meeting to provide you that specific data.

[Operator:]

Thank you. Our next question is from Ted Tenthoff of Piper Jaffray. Your line is open, sir.

[Ted Tenthoff:]

My question has to do with a little bit more with sotatercept and sort of the refocusing of that program earlier in chronic kidney patients. So just to make sure I sort of understand the trial plans, we've got the ongoing phase IIb dosing study or Phase II dosing study and then we're going to start a new one in earlier patients. Tell us about what that trial looks like, how long that could take and then is that the study that would then inform Phase III studies or is that potential for that to be a Phase II/phase III study, the new one that you're going to do in earlier stage kidney disease patients?

[John Knopf:]

Yes, so in terms of the ongoing study, you're right. We have an ongoing study comparing sub-Q versus IV in the Phase II study. However, any new study -- any study we would do in non-dialysis patients would be a new study. And at this stage, we really are not giving sort of any guidance as to what that study looks like until we get the feedback from the regulators based on the data that we provide them.

[Operator:]

Thank you. At this time, I see no other questions in queue. I would like to turn it back to management for closing remarks.

[John Knopf:]

I would like to thank everyone for taking the time today and also for many of you who participated at the R&D day. Again, thanks so much for your attention.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This completes your program. You may all disconnect. Everyone have a great day.

[John Knopf:]

Thank you.