Acceleron Pharma, Inc. (NASDAQ:XLRN)
Q4 2016 Earnings Conference Call
March 01, 2017, 08:00 ET
Todd James - Senior Director of IR & Corporate Communications
Habib Dable - President & CEO
Kevin McLaughlin - CFO
Matthew Sherman - Chief Medical Officer
Geoffrey Porges - Leerink Partners
Slanix Alex - Credit Suisse
Ted Tenthoff - Piper Jaffray
Paul Choi - Barclays Capital
Welcome to the Acceleron Fourth Quarter and Year-End Fourth Quarter 2016 Earnings Call. [Operator Instructions]. 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 and Corporate Communication at Acceleron. Sir, please begin.
Thanks, Kelly and welcome, everyone, to Acceleron's fourth quarter and full-year 2016 earnings conference call. The press release reporting our financial results, in addition to the presentation for today's webcast, are available on the Investor's page of the corporate website at www.acceleronpharma.com.
Joining me in the room today are Habib Dable, our Chief Executive Officer; Steven Ertel, our 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-K on file with the SEC. Our goal this morning is first to provide overview of the quarter and year, review updated financial results and outline our key objectives for 2017.
After that, we look forward to answering all of your questions. I would now like to return call over to Habib Dable, our Chief Executive Officer.
Thank you, Todd. And good morning, everyone. Thanks for joining us today. This is my first quarterly conference call since joining Acceleron three months ago and I'm pleased to say that the excitement I felt when joining the Company has only increased, as I've gotten to know the people, the science and of course, our exciting and diversified pipeline better.
Joining Acceleron from Bayer was a big decision for me and it was absolutely the right one. Not only are there many first-in-class opportunities across multiple programs and portfolios, but there is also an urgency to this team's commitment to transform patients' lives that make it a pleasure to come to work every day.
I'm going to take a few minutes to review the progress that we've made in advancing your programs this past quarter and year. Kevin McLaughlin, our CFO, will then review our financials and then I'll back to finish up and open up the call for some questions.
As many of you know, we have two ongoing Phase 3 trials with luspatercept in myelodysplastic and beta-thalassemia. In January, we and Celgene announced that we expect to complete enrollment in the MEDALIST trial in MDS and the BELIEVE trial in beta-thalassemia in the second half of 2017.
The pace of recruitment in the trials continues to accelerate, give us confidence in our timelines. Our partner, Celgene, has done an incredible job managing these trials and we're obviously very pleased with the progress As I was just coming aboard in the fourth quarter, we had a very successful and productive ASH conference, highlighting positive data with status updates across multiple indications.
In an ongoing Phase 2 extension study, we reported updated data in patients with lower-risk MDS, achieving transfusion independent and clinically meaningful erythroid hematologic improvement response for the International Working Group's criteria, also known as the IWG HI-E, an important measure of response. We now have patients on treatment for over 20 months showing sustaining increases in hemoglobin, erythroid response and transfusion independent with a favorable safety profile.
Also at ASH, in first-line lower-risk MDS patients from ongoing Phase 2 trial, we presented red blood cell transfusion independent in IWG HI-E responses in over 50% of the patients. We continue to enroll patients into this trial and plan to present additional results at medical conferences in 2017 with our partner Celgene. This data will serve to inform our clinical and regulatory strategy in the MDS population.
We also presented updated results in luspatercept and beta-thalassemia at ASH from our ongoing Phase 2 extension study. These data show that a majority of transfusion dependent beta-thalassemia patients achieved greater than or equal to 33% and 50% reduction in transfusion burden compared to baseline.
In the non-transfusion dependent beta-thalassemia segment, a majority of patients achieved an increase of greater than or equal to 1 gram per deciliter in mean hemoglobin, sustained for as long as 18 months with treatment ongoing. These results continue to build on earlier evidence of luspatercept safety and efficacy, both in extended patient segments and in use for longer treatment periods.
Based on these and other data, Acceleron and Celgene is planning to initiate a new Phase 2 trial in non-transfusion dependent beta-thalassemia by the end of 2017. Also at ASH 2016, we presented the first clinical data with luspatercept in myelofibrosis. As some of you know, luspatercept is a compound which has a similar profile to luspatercept for treatment of chronic anemia suffered by patients with a rare blood diseases and is part of our global collaboration with Celgene.
Preliminary data from an ongoing investigator initiated Phase 2 study with luspatercept showed that 36% of the evaluable myelofibrosis patients achieved an anemia response, defined as a composite of red blood cell transfusion independent and hemoglobin response. Myelofibrosis is a malignant disease which results in fibrotic bone marrow, multiple cytopenias and severe anemia, often requiring red blood cell transfusions.
Based on these results, Acceleron and Celgene plan to initiate a Phase 2 trial with luspatercept in myelofibrosis by year end. As you can imagine, we see tremendous potential for luspatercept to be the first truly innovative agent that works to be a novel mechanism to generate healthy red blood cells.
Based on encouraging data across multiple indications and continued expansion into additional patient populations, we agree with our partners' sentiment that with luspatercept has true blockbuster potential.
Turning now to our program with ACE-083 and muscle disease. ACE-083, our lead neuromuscular candidate, is a locally acting therapy designed to increase muscle mass and strength and target muscles for diseases that cause debilitating local muscle loss.
In the fourth quarter, we initiated dosing in a two-part Phase 2 study in patients with FSHD or Facioscapulohumeral Muscular Dystrophy. There is no FDA approved therapy for FSHD which is one of the most prominent forms of muscular dystrophy. Our team is also working hard to initiate a second Phase 2 with ACE-083 in addition to neuromuscular disease this year.
Moving on to dalantercept which is being developed in combination with axitinib further inhibit tumor angiogenesis in patients with renal cell carcinoma. Enrollment continues in this Phase 2 DART study. The primary endpoint of this trial progression-free survival is an event-driven assessment and we expect preliminary data to be available in the second half of 2017. I will now turn over the call to Kevin McLaughlin, our Chief Financial Officer, to run through the financials for the quarter.
Thanks, Habib. Our cash, cash equivalents and investments as of December 31, 2016, were $234.4 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 year was $27.8 million, this revenue is all from our Celgene partnership. It includes license and milestone revenue with $15.6 million and cost sharing revenue of $12.2 million, related to the expenses incurred by the Company in support of our partnered programs. Total cost and expenses for the year were $93.9 million.
This includes R&D expenses of $68.6 million and G&A expenses of $25.3 million. Other income for the year was $9.1 million and includes a $7.3 million non-cash gain on the market of the Company's common stock warrant liability to market. The Company posted a net loss for the year ended December 31, 2016, of $57 million. I will now turn the presentation back over to Habib for final remarks.
Thanks Kevin. Looking ahead to 2017, we will continue to be very busy with several key milestones expected. In the luspatercept programs, we expect a complete enrollment in both MEDALIST Phase 3 trial in MDS and the BELIEVE Phase 3 trial in beta-thalassemia in the second half of 2017.
We will also develop our clinical and regulatory strategy with patients with first-line lower risk MDS in this year. And we plan on initiating new Phase 3 trials in myelofibrosis in the non-transfusion dependent beta-thalassemia by year end and we're expected to report additional Phase 2 extension study data at appropriate medical conferences this year.
Turning to ACE-083, we're anticipating having initial data from the part 1 dose escalation arm of the Phase 2 trial by late 2017 and will initiate a Phase 2 clinical trial in a second neuromuscular disease in 2017 with ACE-083. We're looking forward to reporting topline results from our dalantercept Phase 3 study in renal cell carcinoma in the second half of the year and we will also plan to initiate the Phase 1 healthy volunteer study of ACE-2494.
Finally, our research team continues to be very productive. We plan to host a Research Day later this year to discuss our ongoing preclinical research programs in potential future disease areas. One of my first goals when arriving at Acceleron has been to understand all of the areas that the TGF-beta superfamily can take us. I've been working closely with the team to prioritize and focus on the areas where we have the ability to impact patient lives, by either being first or best in class.
I'm very excited about this event and it will provide an important overview of the key areas where we see future growth and investment opportunities outside of our current clinical pipeline. Stay tuned for further event details over the next few months. With that, I will open the call to questions. Operator?
[Operator Instructions]. The first question comes from the line of Geoffrey Porges with Leerink Partners.
Two related to luspatercept, please. First, in the earlier studies with luspatercept, there were a lot of second-rate benefits in addition to the correction of the anemia. Are you seeing those benefits, as you do all the rigorous analysis of luspatercept Phase 2 data? And could that -- could any of those endpoints such as bone marrow density or any other markers be part of your package when you actually get the Phase 3 data?
And then secondly, related to the new Phase 3 studies -- or Phase 2 and Phase 3 studies that you are contemplating, what is the level of efficacy that would be required? For example, in non-transfusion dependent beta-thal in the non-ESA refractory MDS? What degree of efficacy would you need to see to justify the kind of pricing that you have in mind in the more refractory patients? Thanks.
Given both of those questions, I have some historical background as well, I'm going to pass it over to our Chief Medical Officer, Matt Sherman to handle them.
So let me walk through your questions. So first, with regard to the Phase 2 study, I think you're referring initially to some of the effect of sotatercept in MDS and beta-thalassemia, and whether or not we would be evaluating some of those endpoints with the ongoing Phase 2 studies with luspatercept. Is that correct?
So one of the important things to make was sotatercept in developing had this pronounced effect on increasing marrow bone density. And luspatercept was developed -- it's the effect that we wanted to isolate luspatercept in a hemologic sense. We are not looking rigorously for changes in bone density as the expected outcome for luspatercept.
The secondary endpoints that we've seen across both molecules and we will get more detail on the Phase 2 studies. thalassemia, very importantly, reductions in liver iron concentrations, have been demonstrated in our previous presentations and those continue to be monitored in the ongoing Phase 2 study.
Also, it efficiently increases or changes in quality of life. We've now used a number of scales and by using a facet scale for changes in quality of life. We've shown very nice correlation of improvement in those outcomes with increasing hemoglobin in patients. So there are a number of secondary endpoints that are getting further explored in the ongoing Phase 2 studies.
Can I just quickly confirm that then so there are no changes in any of the other blood cell lineages? And none of the anabolic effects that you originally saw with sotatercept.
In terms of other lineages, we monitor changes in those other lineages but the main effect has been on the erythroid lineage. And that is the one -- that's the primary endpoints in both Phase 2 and the design for the Phase 3 studies. In anabolic effects, are you referring to the bone density?
Yes and anything else that you've seen. So luspatercept is post the greatest specificity purely for the erythroid effect and sotatercept; is that how that is played out?
Yes, very clearly focus on sotatercept is on the erythroid red blood cell lineage.
Okay. And then to the second question was about the efficacy hurdles. Since you're going into the earlier, less refractory populations in both beta-thal and MDS. What sort of effect do you need to see for the product to be viable in those settings, where, of course, certainly in MDS, you are effectively competing with ESAs?
Again, I'm going to hand it over to Matt, Geoff, for some of the details. But one of the things to keep in mind here is that we are very cognizant of the fact that with ESAs, we are going to be dealing with a very different price point potentially in the future.
And as we think about the trial designs with our partner Celgene, I think one of the things that is going to be really important for us is to demonstrate some sort of superiority. I don't know if that's going to be in efficacy, safety, or potentially both.
But we do believe as a Company that if we can demonstrate superiority one way or another that, that will give us a very significant opportunity in and encouraging use of luspatercept in that population. But for some of the specifics, Matt, do want to chime in on that?
Just a comparison between [indiscernible] we can talk about the initial Phase 2 study that was ongoing -- that is ongoing and initially targeted patients with a higher baseline ESA level of 500 or greater and patients who were intolerant and or ineligible for ESAs. We have demonstrated very good response rate.
The ongoing extension cohort that we have for that trial are looking at patients with lower ESA levels, less than 200. And indeed, you might expect that we would see definite response rates in that population because there's some more healthy early-stage population in MDS patients.
And those ongoing cohorts of patients that we will be able to update at medical meetings this year what the response rates are and will inform us to go head-to-head against ESA. So we haven't gone -- deep into what the response rates are required for Phase 3 trials, and we haven't done that for either the lower-risk of FDSH patients as well.
Sorry, Matt, let me confirm. So the hurdle and superiority in this early population, both those ESAs and is the basis of that superiority such as intolerability? Or dosing convenience, or is it efficacy in terms of the anemia response?
It would likely be efficacy.
Our next question comes from the line of Kennen MacKay with Credit Suisse.
Hi, this is Slanix Alex on for Kennen. Thanks for taking the question and congrats on all the progress. I wanted to first ask on the planned Phase 2 trials for luspatercept and wanted to get a sense of whether these trials could be registration and labeling? And have potential to file for sNDAs on top of the MEDALIST and BELIEVE labels or would they have to run an additional Phase 3s to be able to gain access to the extended patient populations?
So again, this is Matt Sherman, to let me just understand clearly. So for the MDS Phase 3 trial we're conducting right now, the MEDALIST trial, that would be sufficient for the NDA, or BLA, so that study is ongoing as we expect we will be able to have those data next year. So you're asking about the MDS Phase 2 studies as being supplemental to those or the --?
In the front-line setting, would they require another Phase 3? Or do you see a potential for phase to potentially provide enough data for an sNDA?
Slanix, commitment right now is finish the Phase 2 trials in those lower-risk MDS patient population, but we will be able to give you more details of the trial design and the regulatory strategy of that approach later this year.
Okay, and just a quick follow-up question on dalantercept. For -- with regards to the guidance for completion of the enrollment, is that guidance for where the enrollment will be complete? Or is this a situation where potentially the event rate is catching up with a planned number of events needed for the analysis without the trial needing to complete the enrollment?
So the second half guidance is around our ability to be able to present the top line progression-free survival analysis results from dalantercept. And at this point, very close to fully completing enrollment in the trial and enrollment is actually not impacting our ability to present results. It's really the number of events, which is what we plan to hit in the second half to be able to then analyze that and present it to the investment community.
Got it. Okay, thanks. Just a quick question on sotatercept as well. Given its unique effects, is there -- what -- is there any other considerations in terms of indications or other programs or areas where you might see this asset being forward or as attractive?
Right now that asset sits with Celgene and there's also some ongoing ISPs with sotatercept. But we do have some ideas and we have some conversations with Celgene and more details to come on that if we can make some progress with our partner.
Our next question comes the line of Ted Tenthoff from Piper Jaffray.
Appreciate the update, guys. I apologize if this question was just asked but I didn't quite hear everything that was said. So I want to ask about dalantercept, with respect to the upcoming DART data, and just with respect to the changing competitive landscape in kidney cancer, what do you guys is going to constitute a hit?
And then ultimately, I think you made it clear that your plans are to partner this. How would you be -- what would you be looking for in an ideal partner? Is it something you would hope to find someone with PD-1 and PD-L1 IL capabilities to explore potential front-line use, or how do you kind of think about that high-level?
Hey, Ted. So in regards to the ongoing DART study, obviously, everyone is aware of the recent approvals of multiple agents over the last two years, with the approval of nivolumab, cabozantinib, axitinib as well in combination with Everol. So there's certainly for patients' benefit, there has been an explosion of their active drugs in the advanced RCC space.
Again, we have not given specific guidance as to what type of improvement we've seen a randomized controlled trial over single agent, axitinib. I think we will need to -- once we see the data, we will be able to then talk more specifically about what the impact of the improvement, if we see one in the Phase 2 study.
In regards to the ongoing activities beyond that, the combinations with IOs, combinations with other digestive inhibitors. Combinations -- or activities in the first-line setting versus where we are known in the second-line setting or in considerations. So once we have our data set complete, that would be part of the ongoing discussions that we'll take forward with potential partner to further develop dalantercept in the oncology space.
Our next question comes from the line of Paul Choi with Barclays.
Habib, it's great to have you on the call here. If we could maybe return back to luspatercept for a second and the planned Phase 2 in the -- for beta-thal and non-transfusion dependent population. Could you maybe characterize -- or provide any characteristics in terms of the population and anything else relative to patient populations that you have already studied? And how we should think about timing for completion of enrollment and other similar milestones and how we should anticipate the data flow from that trial potentially coming out?
Again, the guidance we are giving right now is about the initiation of the trial. We plan to initiate the Phase 2 trial in beta-thalassemia patients by year end. Once it's underway, then we can be more specific about what the expectations are in terms of new flow from the trial in terms of results.
Paul, it's Todd. We will definitely get into trial design, amount of patients, et cetera, right around the time we kick the trial off to get everyone fully informed and get -- if we give guidance or not on enrollment, or data timing at the time, it will at least give you a better idea with the patients -- number of patients within the trial for you to be able to come up with your own estimates.
And then turning to dalantercept, you have made some comments earlier on development and the changing landscape in RCC. But in terms of current study, do you think about any sort of continuation for generating longer-term survival data, overall survival data, and would that be meaningful in terms of your consideration of how to further develop the program? And how does that figure into the equation?
Yes, hi, Paul. It's a good question and actually MEDALIST is an ongoing Phase 2 randomized study; there is a survival follow-up period for all patients, so that would be important data to collect and we'll be able to have that information. when We do the primary analysis for the topline results of progression-free survival, and certainly any patients, post-progression has been followed as well on a quarterly basis for overall survival.
And just a quick one for Kevin, in terms of cash burn, how should we potentially think about that for 2017?
So we have cash as we've stated into the second half of 2019. We ended the year at $234.4 million, and that funds everything that we need to have funds with cash on board today. So you should look at it as a relatively equal distributional in that window of time. Obviously, as we put more things into the clinic operating, it will go up, but we haven't give specific quarterly or annual GAAP cash guidance.
Just to cap that all off, once the data reads out, there's really no pivot in strategy. Our goal is to continue in seeking an appropriate partner for dalantercept.
[Operator Instructions]. Our next question comes from the line of Robyn Karnauskas with Citi.
This is [indiscernible] for Robin. Congratulations on all the progress and thank you so much for taking my questions. I had a couple of questions about luspatercept in the RF negative subset. So based on the data that you guys presented, and also talking with you guys earlier, is it fair to say that RF negative patients with high endogenous EPO levels do not respond well to luspatercept?
We are just trying to understand what -- which subset of RF negative patients would be good to target with luspatercept? And then I had another question about the FSHD trials. I'm just curious about how the recruitment is going on for the Phase 2 trial? And if you can add a little bit more color about the type of patients that are being recruited, that would be great. Thank you so much.
It's Todd. So as far as the RF negative population goes, it definitely looks to us like RF negative, based off of the literature as well as a poor prognostic outcome for the patient's relative to having RF positivity. And then also if you look at baseline or endogenous EPO levels for patients, the higher the number, the more complication within the bone marrow, so that is a proxy for that, and another negative mark for the patient.
So with a really small number of patients in the lower side of the EPO baseline, we are able to evaluate at ASH, it looks like some EPO level from under 500, we continue to learn more as we get additional patients into the trial. But the lower EPO levels, and it might be below 200 or below 500 might be a place where luspatercept could work. So as we continue to get additional patients into the trial, we will hopefully be able to confirm that early hypothesis.
The follow-up to that is, how is recruitment ongoing? I know you said you plan to enroll up to 25 patients with RF negative, in the RF negative preset. Can you give us an idea of when we might see data from more patients beyond what we saw at ASH?
Yes, we are definitely hoping to provide an update in June at EHA. The only caveat to that is that this year is one of the years that the International MDS Symposium falls, so there is also potential to give an update in early May, at that conference. So we haven't decided yet. So worst-case scenario, at EHA, potentially at the MDS Symposium in May.
Let me answer your second question about -- on the FHD study. We are very pleased. We hit our goal starting up the study last year and enrollment is underway. We are also pleased with the progress we've made but we can't give specific numbers in terms of enrollment. We are working through, as you look at the clinicaltrials.gov site, and we have the site the leading neuromuscular centers in cities such as Rochester, Washington University, St. Louis, and Kansas.
And for more background on the disease, there was a webinar that was given by Jeffrey Statland from Kansas University last year, that is on our website as well as reference. And it shows some of the support we've had from leading investigators in this particular disease. And as we stated, our goal for this year is to be able to see it record by the end of this year so topline news above Part 1 of the study which is dose-escalation, Part 1 study, and two muscle groups in the biceps and in the tibialis anterior muscle.
And if I can actually just quickly sneak in one more question. I'm just wondering when we might get an update on what sort of update we might get on the Phase 2 trial in myelofibrosis that you intend to start by the end of the year? Would it be something similar to the FSHD webinar? Or would you just do a press release? Any idea would be great.
It's Todd again. So closer to the start of the trial, and this goes the same for NTD-FAL that we plan to start closer to the end of the year. We haven't decided on the exact event. But at least a webinar, and potentially a live event in New York to go through all the details of the protocol and trial designs for everybody to be fully educated on our strategy there in Phase 2.
This is Habib. I just wanted to just add one more thing to what Matt was saying regarding FHD. I just wanted to remind everyone everything that we had just talked about was Part 1 of the study which is a dose-escalation study which is going to lead us into Part 2 next year, which in our opinion, is going to be an extremely important opportunity for us to learn more about this population, when we are going to be looking at 40 new patients in a placebo-controlled study, and looking at not only muscle mass, but also looking at strength and function. We are pretty convinced that if we can't show strength and function improvements, there's a low probability of us having a successful drug.
Thank you. I'm showing no further questions at this time. I would like to turn the call back to Mr. Dable for closing remarks.
Thank you. Thanks everybody for joining the call today. I hope to see everybody at our upcoming investor conferences later in the month. And we look forward to keeping you informed on all of the exciting developments that we expect through 2017. Wishing you all a great day.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a wonderful day.
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