Acceleron Pharma Inc. (NASDAQ:XLRN)
Q2 2016 Results Earnings Conference Call
August 04, 2016, 08:00 AM ET
Todd James - Senior Director of Investor Relations
John Knopf - Chief Executive Officer
Steven Ertel - Chief Operating Officer
Matthew Sherman - Chief Medical Officer
Kevin McLaughlin - Chief Financial Officer
Mike King - JMP Securities
John Eckert - Barclays
Kennen MacKay - Credit Suisse
Good day ladies and gentlemen, and welcome to the Acceleron Second Quarter 2016 Earnings 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. As a reminder, this conference is being recorded.
I would now like to introduce your host for today's conference, Mr. Todd James, Senior Director of Investor Relations, Corporate Communication at Acceleron. Sir, please begin.
Thanks. And welcome everyone to Acceleron's second quarter 2016 earnings conference call. The press release reporting our financial results in addition to the presentation for today's webcast are available on the Investors page of the corporate website at www.acceleronpharma.com.
Joining me in the room today are John Knopf, our Chief Executive Officer; our Steven Ertel, Chief Operating Officer; Matthew Sherman, our Chief Medical Officer; and Kevin McLaughlin, our Chief Financial Officer.
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 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 Ertel, our Chief Operating Officer.
Thank you, Todd. Good morning everyone and thanks for joining us today. Our goal this morning is to provide an overview of the quarter, review financial results and outline the key objectives for the remainder of 2016. After that, we look forward to answering your questions.
Acceleron is committed to building one of the leading biotechnology companies in the industry. We have a deep diversified pipeline of four distinct therapeutic candidates currently being studied in eight clinical trials, two of which are Phase III studies which if successful would enable us to become a fully integrated commercial entity.
We have presented robust compelling clinical data across the pipeline that builds momentum for the ongoing and future study and increases our confidence in these programs.
We have a strong and productive collaboration with Celgene with very good economic terms. We are in solid financial position with funding for essentially the next three years into the second half of 2019 and we believe there is an opportunity for substantial value creation considering breadth and depth of our pipeline and the numerous value on introduction point [ph] that can occur within the next few years.
Acceleron is building a robust pipeline spanning a wide range of disease, including blood disorders, muscle disorders, kidney disease and cancer. We have four therapeutic candidates in clinical trials to date, ACE-083 in Phase I, dalantercept and sotatercept in Phase II, and luspatercept being studied in two Phase III trials.
With this pipeline, our company is positioned for both near term and long-term value creation. Through the collaboration we've entered and the operational structure of our company we remain on track and have the resources and expertise to achieve our objective of advancing a new molecule into the clinic every 12 to 18 months.
I will now turn to the progress we've made this past quarter. During the quarter, we made strong progress advancing our clinical pipeline, while Celgene is recruiting patients in the pivotal Phase III studies of luspatercept and myelodysplastic syndromes or MDS and beta-thalassemia, we continue to treat with MDS and beta-thalassemia in the long-term Phase II extension studies to gather information on a long-term safety and efficacy of luspatercept in these diseases.
Moving to the dalantercept program, we continue to enroll and treat patients in the Phase II study in advance renal cell carcinoma. For the sotatercept program, we and Celgene continue to asses the opportunity patients with pre-dialysis, chronic kidney disease due to diabetic nephropathy and expect to provide an update later this year.
Turning to ACE-083, our investigation of therapeutic candidate designed to selectively increase muscle mass and strength. We have now completed enrollment and treatment of all seven cohorts of our Phase I study and presented new Phase I clinical data at the International Congress on Neuromuscular diseases in early July. I will discuss these results later in the presentation.
Given the enormous scope of activity on the luspatercept program, let's focus on this program in a bit more detail. As you can see, we have five ongoing clinical trials with luspatercept.
Starting with our efforts in MDS, Celgene is currently enrolling patients in the Phase III MEDALIST study. In the long-term extension study, we presented data at the Annual Congress of the European Hematology Association or EHA that confirmed and extended the long-term safety and efficacy of luspatercept.
In our third clinical trial, as part of our joint commitment to fully explore the clinical utility of luspatercept in patients with MDS, we want to determine the safety and efficacy of luspatercept in lower risk MDS patients who are ESA treatment naïve or ring sideroblast negative.
Should luspatercept ultimately proved to be safe and effective in either of these patient population, it could broaden the significant market opportunity for luspatercept and MDS.
In beta-thalassemia, Celgene is currently enrolling patients in the Phase III BELIEVE study. In the long-term extension studies, we presented data at the EHA Annual meeting demonstrating a long-term safety and efficacy of luspatercept.
I will now briefly highlight the data presented at EHA. In MDS luspatercept generated robust hematologic improvement that were sustained with longer term treatment. Increases in hemoglobin were extended to 15 months. In transfusion dependent patient treatment with luspatercept produced long-term duration of transfusion independence that remains ongoing in several patients.
We presented similarly positive data in beta-thalassemia with sustained increases in hemoglobin that extended to 12 months. Furthermore, hemoglobin increases correlated with improvements in quality of life. In regularly transfused patients many experienced meaningful reductions in the transfusion burden compared to baseline.
The safety profile of luspatercept remains encouraging in both settings with long-term treatment. We're pleased with continued strength of luspatercept data and look forward to providing additional updates from this comprehensive development program.
Let's now review data from the ACE-083 program, our locally acting muscle agent designed to increase muscle and mass and strength. The Phase I study a double-blind, randomized placebo controlled dose escalating trial conducted in healthy volunteers was designed to evaluate the safety and tolerability of a single dose or two doses of ACE-083 at a local muscle injection.
We previously reported results from the first five cohorts of subject receiving either ACE-083 or placebo injected into the right rectus femoris muscle of the quadriceps. These data are shown in the top level panel of this slide.
Building on these promising results, we presented new data at the International Congress of Neuromuscular diseases in Toronto just a few weeks ago from trial cohorts six and seven, exploring ACE-083 effect on tibialis anterior muscle. This muscle located in the lower leg is affected in many forms of neuromuscular disease.
As shown in the chart on the bottom left, ACE-083 produced statistically significant dose dependent increases in muscle volume assessed by MRI of the tibialis anterior muscle, at the highest dose level ACE-083 generated a mean increase in muscle volumes of 8.9%.
The correlation plus on the right side of the page further established a relationship between increases in muscle volume and the dose of ACE-083. We are encouraged by these results and look forward to advancing into our first Phase II trial with ACE-083 in patients with facioscapulohumeral muscular dystrophy later this year.
I will now turn the call over to Kevin McLaughlin, our Chief Financial Officer to run through the financials for the quarter.
Thanks Steve. Our cash, cash equivalents and investments as of June 30, 2016 were $262.7 million, this compares to December 31, 2015 cash, cash equivalents and investments of $136 million.
As a reminder, we believe that our existing cash, cash equivalents and investments will be sufficient to fund our projected operating requirements into the second half of 2019.
Collaboration revenue for the second quarter was $3.2 million. Cost sharing reimbursement revenue from our Celgene partnership was $3.1 million and is related to expenses incurred by the company in support of our partner programs.
Total costs and expenses for the second quarter were $22.8 million. This includes R&D expenses of $16.1 million and G&A expenses of $6.7 million.
Other expense for the second quarter was $2.4 million and includes a $2.9 million non-cash loss on the marking of our common stock warrant liability to market. The company's net loss for the second quarter ended June 30, 2016 was $22 million.
I’ll now turn the presentation over to John Knopf, our CEO.
Thanks Kevin. I'd like to start by welcoming Thomas McCourt, to our Board of Directors. Tom as the Chief Commercial Office and Senior Vice President of Marketing and Sales at Ironwood Pharmaceuticals. He has over 30 years of experience building commercial strategies and capabilities for new therapeutic. We look forward to his contribution as we prepare for our next stage of growth.
Looking ahead towards of the remainder of the year, we anticipate having additional results from the luspatercept long-term extension studies and MDS and beta-thalassemia at a Medical Conference before year end. We will also provide a preliminary overview of data from our recently initiated MDS Phase II cohort in ESA naïve and RS negative patients, which if successful would expand the market size for luspatercept beyond the indication being evaluated in the Phase III MEDALIST trial.
We also expect to report top line results on dalantercept in combination with axitinib in renal cell carcinoma. For this study the primary endpoint progression free survival is an event driven data point that we currently anticipate reaching around years end.
As Steve described earlier, we continue to make good progress on our muscle program ACE-083. We are on tract to launch a Phase II study in patients with FSHD, a form of muscular dystrophy in the second half of the year. We also expect to initiate and ACE-2494 Phase I healthy volunteer clinical trial in the first half of 2017.
Finally, we are planning to provide an update on the development plan for sotatercept later this year. So as you can see, 2016 is shaping up to be another exciting and productive year for Acceleron.
I'd like to thank you very much for your attention and I would now like to open the call to questions.
[Operator Instructions] Our first question comes from Mike King with JMP Securities. Your line is open.
Good morning, guys. Thanks for the taking question and congrats on the progress start to year. I had a couple of questions actually, wondering if you might speak to the population and the ESA naïve arm of the luspatercept study, how would you know, what will this population look like and sort of what would your expectations be for a positive result?
Sure. Good morning, Mike. It’s Steve Ertel. So I'll start with that one. So the ESA naïve population that were studying in the Phase II study is slightly distinct from what is patients who are eligible to enroll in the Phase III study who are either refractory or resistant to ESAs or considered ineligible to receive ESAs based on their endogenous EOP level.
The Phase II study with ESA naïve population would include patients who would otherwise be considered eligible for ESAs, today have low EPO levels. We have presented some data from these patients. We have a very limited number of them in our Phase II study. I don’t think we're in a position to be able to project response rate. But as mentioned earlier, we look forward to having our first data from this study available by year end.
All right. Maybe if I can just press a little bit, can you talk about you said low EPO levels, I mean, sort of under what threshold and can you say anything about what your thoughts would be about you know, sort of where they would be in terms of hemoglobin you know, baseline hemoglobin levels, will they be able to have other hematopoietic dysfunction like low neutrophils, low platelet et cetera?
Right. So all the patients in the study would have to be anemic to be eligible to participate in the study and then the absence of participating in this clinical trial - and anemia is defined as hemoglobin level of less than 10.
A standard threshold for inclusion in studies characterized as being anemic. So does that answer the question?
Yes. And could they – would they be able to have other dysfunction like in platelets or neutrophils?
Hi, Mike. Yes, this is Matt. So no generally they have to have reasonable levels of both neutrophils and platelet levels.
Okay. And you said first preliminary results by the end of the year?
Yes, we'd expect to have the first look at patient by the end of this year.
Great. Okay. And then switch real quick to dalantercept then I'll turn back in queue. The – just talk about the strategic value of dalantercept to Acceleron – this doesn’t, you know, it seems like everyday goes by, there is another competitor or competitors who just had [indiscernible] approved, cabozantinib is approved, just where does dalantercept fit in when this sort of hodgepodge of different therapies for RCC?
Sure. So, again, this is Steve. So as we communicated dalantercept, we are excited about the opportunity and think it is a program that can add meaningful clinical benefit to those patients receiving VEGF therapy.
In advanced RCC there are several distinct VEGF TKIs that are used cabozantinib being the most recent and encouraging data in that category. It remains a very important category for the treatment of patients with RCC and our hope is dalantercept will prove to show additional clinical benefit combination with that class of drug in these patients.
From a corporate perspective though, we have communicated that pending successful results in these Phase II study we will seek a partner for this program who has the infrastructure and ability to maximize the value of dalantercept on behalf of Acceleron shareholders.
Okay. Thanks very much.
Thank you. Our next question comes from John Eckert with Barclays. Your line is open.
Good morning. Thanks for taking question. I was just going to ask something on luspatercept, it’s more a big picture. In the past the FDA has conducted workshops on endpoint CKD, and that went a little quiet. I was wondering have there been any more regulatory interactions or discussions, outside of you guys, regarding endpoints in the CKD and so how important is this in your view about the kind of return on investment for an asset like luspatercept in this setting?
Hi, John. This is Matt Sherman. So I think, maybe there is two parts to this question. I mean, one in general, you know, the FDA is actually has been open in terms of thinking about novel endpoints in the CKD population you know. You know, classically previous drugs have been approved on the progression of CKD patients based on time to dialysis death or doubling serum creatinine and they have stated that, other endpoints that might be less vigorous, it could be possible endpoint for drug developers with agents in that area.
So I think your statement in general is a good one and it’s appreciated it that it would facilitate developing drugs in the CKD space.
And specifically as our program stands right as we've stated, we have made a commitment to update people on the decision later this year in terms of what our plans will be moving forward with sotatercept in the CKD population.
Great. And then, I guess, on one of your earlier programs, 2494, its interesting that this could wrap fibrotic disorders. So what's the Phase I, would that just be a healthy volunteer trial, is there any thoughts about what initial clinical patient setting you would be interested in going after the first where its most appropriate?
Sure. Hey, John and this is Steve Ertel. So we have historically conducted our Phase I studies in healthy volunteers, so I think it’s likely that we would do same for 2494. We have not disclosed specific disease indications in which we intend to pursue for this molecule. It does have some very interesting pharmacologic properties.
I think over the course of the year as we get closer to IND filing and initiation of the Phase I study, we'll be in a better position to provide more details of course on the Phase I design and indications that we may pursue with that program.
Great. Thank you very much.
Thank you. Our next question comes from Kennen MacKay with Credit Suisse. Your line is open.
Hey, guys. Thanks for taking my question. It looks like you sort of narrowed the population for sotatercept into patients with pre-dialysis CKD due to diabetic nephropathy, can you talk a little bit about how you sort of narrowed it down to patients with diabetic nephropathy and if that is just a more severe population if that’s because maybe you might see some better efficacy there and really just what that rational was? Thank you.
Sure. Hey, Kennen, this is Steve Ertel. So as you may know diabetic nephropathy is the leading cause of the leaning [ph] underlying disease that contribute to chronic kidney disease. In fact 50% of all pre-dialysis chronic disease patients have diabetic nephropathy.
So this is an enormous patient population and that has been a major driver in considering this particular segment of the pre-dialysis CKD population and is the basis for our assessment for Celgene and discussions with health authorities as we contemplate pursuing that particular population.
Got you. Okay, thank you very much. Narrowed is the wrong word there. And then just relating to FSHDS, I was wondering if you could maybe give us any kind of estimate as to how long you think enrollment could take there, we've seen a couple other trials in this population emerge within sort of the last year or so?
Sure. Kennen, I'll start and – its Steve again, to respond to that question. So we haven’t given – excuse mea, any guidance yet on enrollment of course. I think what will be helpful is as we approach the start of that Phase II study and we discussed the design of the study, I think it will be an appropriate point at that stage to anticipate how long it will take us to sort of work through that study and give some estimates.
I don’t necessarily think that – in fact I wouldn’t recommend using other studies that have been done FSHD as a proxy for enrollment. There is different segments of patients, drugs of different benefits and as we approach I think it would be very – just be patient and let us describe that study in the patient population because it will be distinct from what others have studied. So it will be different enrollment rate.
Fair enough. I am looking forward to it. Thanks very much and thanks for taking the questions.
Thank you. [Operator Instructions] Our next question comes from Mike King with JMP Securities. Your line is open.
Hi, thanks for taking the follow up. I think Steve answered my question in his response to Jonathan’s question which is about pre-clinical assets in fibrotic diseases and whether you would be willing to talk about some of the proposed indications for those?
Well, if there are any further questions? No further questions. As you've heard throughout today's call, we have a significant product plan to continue to build on our successes to date. And we look forward to delivering on our goals of bringing highly innovative products to patients with serious and life threatening illnesses. Thank you and have a great day.
Ladies and gentlemen thank you for your participating in today’s conference. This does conclude the program and you may now disconnect. Everyone have a great day.
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