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Edited Transcript of XLRN earnings conference call or presentation 30-Oct-18 8:30pm GMT

Q3 2018 Acceleron Pharma Inc Earnings Call

Cambridge Nov 3, 2018 (Thomson StreetEvents) -- Edited Transcript of Acceleron Pharma Inc earnings conference call or presentation Tuesday, October 30, 2018 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Habib J. Dable

Acceleron Pharma Inc. - CEO, President & Director

* John D. Quisel

Acceleron Pharma Inc. - Executive VP, Chief Business Officer & Secretary

* Kevin F. McLaughlin

Acceleron Pharma Inc. - CFO, Senior VP & Treasurer

* Robert K. Zeldin

Acceleron Pharma Inc. - Chief Medical Officer

* Sujay Kango

Acceleron Pharma Inc. - Senior VP & Chief Commercial Officer

* Todd James

Acceleron Pharma Inc. - VP of IR & Corporate Communications

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Conference Call Participants

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* Aravinda Kuntimaddi

* Carter Lewis Gould

UBS Investment Bank, Research Division - Large Cap Biotech Analyst

* Christopher N. Marai

Nomura Securities Co. Ltd., Research Division - MD and Senior Analyst of Biotechnology

* Danielle Catherine Brill

Piper Jaffray Companies, Research Division - VP & Senior Research Analyst

* Eric William Joseph

JP Morgan Chase & Co, Research Division - Analyst

* Holly Samantha Barra

Goldman Sachs Group Inc., Research Division - Business Analyst

* Jason Eron Zemansky

Barclays Bank PLC, Research Division - Research Analyst

* Jeff Hung

UBS Investment Bank, Research Division - Former Associate Director and Analyst

* Justin Hayward Burns

RBC Capital Markets, LLC, Research Division - Senior Associate

* Srikripa Devarakonda

Citigroup Inc, Research Division - Research Analyst

* Tiago Felipe Fauth

Crédit Suisse AG, Research Division - Research Analyst

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Presentation

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Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [1]

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Thanks, and welcome, everyone, to our Third Quarter 2018 Earnings Conference Call. The press release reporting our financial results, in addition to the presentation for today's webcast, are available on the Investors and Media Page on the corporate website at www.acceleronpharma.com.

Joining me for the call today are Habib Dable, our Chief Executive Officer; Robert Zeldin, our Chief Medical Officer; Kevin McLaughlin, our Chief Financial Officer; John Quisel, our Chief Business Officer; and Sujay Kango, our Chief Commercial Officer.

Our goal this afternoon is to provide an overview of our recent operational progress along with reviewing our corporate priorities and updated financial results for the third quarter. After that, we look forward to answering your questions.

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 materially differ from those forecasted. A description of these risks can be found in our most recent Form 10-K on file with the SEC.

I would now like to turn the call over to Habib Dable, our Chief Executive Officer.

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Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [2]

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Thank you, Todd. Good afternoon, everyone, and thank you for joining us today. 2018 is proving to be a pivotal year for Acceleron. We have made significant progress in each of our therapeutic areas of focus -- hematology, neuromuscular, and pulmonary disease. The entire pipeline is on track to reach multiple key inflection points over the next 2 years.

In hematology, alongside with our partner, Celgene, we are continuing to execute on our vision to bring luspatercept, our first in class erythroid maturation agent to the thousands of patients with mmyelodysplastic syndromes or MDS, and beta-thalassemia, suffering from anemia.

At the same time, we are evaluating further indication expansion as we believe luspatercept is a potential platform treatment for anemia. I will jump into this in more detail in just a minute. Outside of hematology, we continue to make strong progress in the neuromuscular and pulmonary programs. For ACE-083, we have initiated Part 2 of each Phase II trial in patients with facioscapulohumeral muscular dystrophy, or FSHD, and Charcot-Marie-Tooth Disease or CMT.

And for sotatercept, our PULSAR Phase II trial in pulmonary arterial hypertension, or PAH, is enrolling as planned, and Robert will review these in just a few moments. It's an exciting for luspatercept and it remains obviously our number one priority at Acceleron. Over the summer, we were pleased to report positive Phase III results for both the MEDALIST trial in patients with lower risk MDS and the BELIEVE trial in patients with transfusion-dependent beta-thalassemia.

We are looking forward to the MEDALIST and BELIEVE Phase III trial presentations expected at the world's largest hematology meeting, the upcoming American Society of Hematology, or ASH 2018 Annual Meeting on December 1 to 4 in San Diego. As a reminder, all accepted ASH abstracts will be announced and available online this coming Thursday.

We continue to invest heavily in the overall luspatercept opportunity through its expanded development in multiple ongoing clinical trials. With the recent initiation of the COMMAND Phase III trial, we now have 3 ongoing clinical trials in 3 additional patient populations. The COMMANDS trial will enroll 350 patients with lower risk MDS who are treatment naive with a baseline red blood cell transfusion burden of 2 to 6 units per 8 weeks and baseline erythropoietin levels of 0 to 500 units. Patients will then be randomized one-to-one on luspatercept and erythropoietin alpha.

The primary endpoint of the trial is red blood cell transfusion independence for the first 24 weeks. Enrollment remains ongoing in the myelofibrosis and non-transfusion dependent beta-thalassemia Phase II trials for luspatercept. With positive Phase III results in 2 distinct hematologic diseases, we believe luspatercept has the potential to be a platform treatment for a range of anemias. We and our partners at Celgene are actively evaluating opportunities where luspatercept could be beneficial to the many additional patients suffering from anemia through expanded development and lifecycle management plans.

Based on the 5 current indications under development alone, we estimate luspatercept could impact more than 120,000 patients in the U.S. and EU who lack viable treatment options.

And with that, I'll now turn over the presentation to our Chief Medical Officer, Robert Zeldin, to outline the progress of our neuromuscular and pulmonary programs.

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Robert K. Zeldin, Acceleron Pharma Inc. - Chief Medical Officer [3]

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Thanks, Habib and good afternoon everyone. I'd like to begin by acknowledging the hard work of our neuromuscular and pulmonary teams in getting multiple Phase II trials underway for a ACE-083 and sotatercept this year.

Beginning with our neuromuscular program, we recently presented final Part 1 results for ACE-083 from each of our Phase II trials in patients with FSHD and CMT respectively at the 2018 World Muscle Society Annual Meeting in Argentina. As a reminder, ACE-083 is designed to increase strength and function in specific target muscles. The data presented were consistent with the findings we reported at neurology congresses throughout this year where patients experienced robust mean increases in total and contractile muscle volume of over 12%.

Additionally, we recently initiated Part 2 of the Phase II CMT trial and enrollment is ongoing in Part 2 of the Phase II FSHD trial. Both of these are double-blind, placebo-controlled studies that are evaluating increases in muscle volume and functional outcomes over a 6-month period followed by a 6-month open-label extension.

In parallel with our ACE-083 trials, we continue to enroll healthy volunteers in our Phase I trial of ACE-2494, our systemic neuromuscular candidate designed to have a systemic effect on muscle mass and strength throughout the body.

Moving to our pulmonary program, we continue to advance the PULSAR Phase II trial where we are enrolling approximately 90 patients with pulmonary arterial hypertension, a disease with a tremendous unmet medical need. As you recall, sotatercept acts as a ligand trap for specific proteins within the TGF-beta superfamily that are directly involved in the BMP signaling pathway, a molecular pathway fundamental to all forms of the disease.

Upcoming in PAH, we will be presenting multiple preclinical abstracts of sotatercept at the American Heart Association's scientific sessions in Chicago on November 10 through 12. We are also planning to initiate an exploratory study called SPECTRA during the first quarter of 2019 from which we expect to gain insights that will assist us in our evaluation of the effects of sotatercept as a potential first in class disease-modifying treatment.

On this note, we hope you'll join us in New York on November 16 at our PAH research and development deep dive event. The event will include presentations by internal and external experts on the current treatment gaps, sotatercept's mechanism of action, and the importance of BMP signaling in PAH, along with preclinical presentations and an overview of our clinical development efforts.

For those of you who are unable to attend the event, a live and on-demand webcast will be available in the investors and media section of our website.

With that I will now turn the call over to Kevin McLaughlin, our Chief Financial Officer, to run through the financials for the quarter.

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Kevin F. McLaughlin, Acceleron Pharma Inc. - CFO, Senior VP & Treasurer [4]

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Thanks, Robert. Good afternoon everyone. Our cash, cash equivalents, and investments as of September 30, 2018 were $319.8 million. This compares to December 31, 2017 cash, cash equivalents, and investments of $372.9 billion. As a reminder, we believe that our existing cash, cash equivalents, and investments will be sufficient to fund our projected operating requirements into 2021.

Collaboration revenue for the third quarter was $3.3 million. The revenue is all from our Celgene partnership and is primarily related to expenses incurred by the company in support of luspatercept. Total costs and expenses for the third quarter were $33.4 million. This includes R&D expenses of $24.7 million and G&A expenses of $8.7 million. The company posted a net loss for the third quarter ended September 30, 2018 of $29 million.

I'd now like to turn the call back over to Habib who will quickly cover our upcoming corporate priorities.

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Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [5]

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Thanks, Kevin, and to quickly recap our upcoming corporate priorities. For hematology, we expect to present MEDALIST and BELIEVE Phase III data at the 60th American Society of Hematology Annual Meeting and Exposition in December. We and Celgene plan to submit regulatory applications to the U.S. and EU health authorities in both MDS and beta-thalassemia in the first half of 2019.

We also continue to actively enroll our ongoing COMMANDS, BEYOND, and myelofibrosis clinical trials with luspatercept.

Turning to neuromuscular disease, we expect to report preliminary results from Part 2 of the FSHD trial in the second half of 2019 and preliminary results from Part 2 of the CMT trial are expected by year-end 2019. And ACE-2494 Phase I results remain on track for the first half of 2019.

And finally, in pulmonary disease, we will host a PAH R&D deep dive event in just a few weeks on November 16. Clinical activities are underway to initiate the exploratory study called SPECTRA in the first quarter of 2019. And preliminary results from the PULSAR Phase II trial are expected in the first half of 2020.

Before I open the call to questions, I want to acknowledge our team for their incredible work in advancing our pipeline and these important indications with the goal of delivering transformative medicines to patients. I am very confident that we are well on our way to achieve our goal to be a fully integrated biopharmaceutical company with 3 programs in Phase III development by the end of 2020.

And with that, we welcome your questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Carter Gould from UBS.

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Carter Lewis Gould, UBS Investment Bank, Research Division - Large Cap Biotech Analyst [2]

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I guess to start, obviously, a lot of expectations around the ASH presentation, particularly MEDALIST. Particularly interested in some of the duration data we're going to see there. Can you maybe help us think about how far out that duration will go? Will that be limited to 48 weeks? And then maybe just put that in the context of what we saw in the Phase II.

And then separately on ACE-2494, I recognize it's just a Phase I but it looked like that moved from a multi-ascending dose study to a single-ascending dose and that the patient numbers went down -- enrollment numbers went down. So just trying to understand what's going on there, if that based on feedback from FDA or other issues. Thank you.

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Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [3]

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Carter, thanks for your questions. This is Habib. I'll take the first question with respect to the MEDALIST data and then maybe I'll hand it over to Robert Zeldin, our Chief Medical Officer, to answer the question regarding 2494.

So just to remind everyone, the last time we gave a data cut with respect to duration, it was at ASH 2017 and just to remind everyone, when we looked at duration, the mean duration of therapy for those who were responders was approximately 19 months.

Now, obviously, the MEDALIST study, its primary endpoint is at 24 weeks and the study was blinded through 48 weeks for the secondary endpoint. We will be unable to achieve that type of a mean duration of therapy. So we will continue to potentially update the Phase II study for the ongoing patients, and with respect to the MEDALIST study, obviously, there's going to be patients that would, if they were to make it through the 48 weeks, we would need to continue to update them to see if indeed they will have similar types of mean duration of therapy as we're seeing in the Phase II.

So impossible to see that kind of therapy in the Phase III. So let's wait and see. Robert, with respect to 2494?

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Robert K. Zeldin, Acceleron Pharma Inc. - Chief Medical Officer [4]

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Yes. So indeed, as originally designed that study had a single ascending dose and then a multiple ascending dose component. When we reviewed the design, we felt that it was actually valuable to push the dose higher in the single ascending dose portion of the study. So we've gone from 0.6 mgs/kg and we're going to push it up past that, up to 3 milligram per kilogram with the current design, single ascending dose that is.

What we expect then is that we'll be able to move into the multiple ascending dose cohorts in a future study in patients with the disease. So that's our planned approach and we're moving the study forward as we had planned.

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Operator [5]

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Our next question comes from the line of Geoff Porges from Leerink Partners.

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Aravinda Kuntimaddi, [6]

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This is Aravinda. I'm in for Geoff Porges. Just a couple questions regarding 2494. Will there be any analysis of muscle response or volume in the Phase I healthy volunteers study or it will be just safety and tolerability. And have you progressed in identifying indications for further development of 2494 assuming the success in Phase I trial? And lastly, just regarding ASH, we're excited about your presentation at ASH. Are you planning any special investor events with or without Celgene?

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Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [7]

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So we are of course primarily focused on the safety in the 2494 single ascending dose study, but we also are doing some pharmacodynamic assessments via MRI imaging in the lower extremity.

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Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [8]

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And as far as the indication goes, hi, this is Todd, we continue to explore where we'll go first in Phase II. At our R&D day last year in September, we outlined that we're evaluating ALS, SMA, DMD, and FSHD. So a decision hasn't been made there yet. You could expect that after we complete the Phase I next year that we'll give more details in where we will go first with ACE-2494 in actual patients for a Phase II.

And then did you have another question about ASH?

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Aravinda Kuntimaddi, [9]

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Yes, we were just wondering if you're planning a special investor event with or without Celgene at ASH?

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Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [10]

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So you're exactly right. We do plan to host a call, Acceleron only, at ASH, and there will be more details to come in the next few weeks on that call.

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Operator [11]

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Our next question comes from the line of Danielle Brill from Piper Jaffray.

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Danielle Catherine Brill, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [12]

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I guess I'm just wondering, can you comment on powering assumptions for superiority in COMMANDS? And I have a couple follow-ups.

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Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [13]

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Thanks, Danielle. So similar to MEDALIST and BELIEVE, we weren't able to talk about powering assumptions until we provided the topline results. So I think again here, with COMMANDS, we'll most likely do the same thing. I think if you think about it in context of what we saw in Phase II and what EPO has historically seen in the Phase IIIs, we saw over a 50% response rate for luspatercept in the Phase II for RBC transfusion independence and in the Phase III in the 2 EPO studies, the primary was high E. So different endpoint but they saw response rates of 50% to 30%. And so that's of the ballpark of how you could think of powering assumptions for COMMAND.

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Danielle Catherine Brill, Piper Jaffray Companies, Research Division - VP & Senior Research Analyst [14]

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And last time we spoke, you guys mentioned that for the trial, you'll be RS data agnostic. Can you just remind me what response rates look like with luspatercept versus BFAs and RS negative patients?

Yes, sure. So in the ESA trials, they didn't break patients out by RS positive versus RS negative. It was an all-comers treatment naive. So we're not aware of what those breakouts are. But in luspatercept, when you look at the inclusion criteria of COMMAND, and those are patients with EPO levels of 0 to 500, both RS negative and RS positive, we had over 50% response rates.

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Operator [15]

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Our next question comes from the line of Robyn Karnauskas from Citi.

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Srikripa Devarakonda, Citigroup Inc, Research Division - Research Analyst [16]

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This is Srikripa on for Robyn. Thank you so much for taking my question. Can you help us understand the potential opportunity for luspatercept beyond the indications that you're currently pursuing, MDS, beta-thalassemia, myelofibrosis? When do you think we can hear more details about these opportunities and also just trying to understand what sort of -- what is your strategy in trying to pick the indications that you would like to develop luspatercept in?

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Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [17]

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Thanks for your question, Srikripa. This is Habib. So again, thrilled with the fact that we were able to show positive Phase III trials in 2 very distinct diseases. And in doing so, the versatility of luspatercept is providing us with that bullishness to cast a wider net if you want.

And we and our partners at Celgene are working diligently. You made reference to myelofibrosis. We obviously have a myelofibrosis study that was initiated in the fourth quarter of last year where we're recruiting 70 patients in that particular indication.

But we're also working very hard now based on the Phase III data to be looking at other indications where we feel luspatercept could fulfill an unmet need. And as I mentioned, we and our partners are very much engaged in looking at where that potential mechanism of action makes the most sense, where we feel that the unmet need is high, and we will be coming back to you very, very shortly with updates in terms of that analysis and where we'll be prioritizing our resources for the next indication.

I know that Sujay Kango, our Chief Commercial Officer, is also working with his teams very closely to identify opportunities where we feel that we could work with the teams at Celgene and perhaps Sujay, you can give a little bit of an update in terms of those conversations and some of the next steps.

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Sujay Kango, Acceleron Pharma Inc. - Senior VP & Chief Commercial Officer [18]

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Sure. Hi, Srikripa. Thanks for your question. So just to clarify, right, so the initial sort of estimates that we've communicated generally speaking have -- along with Celgene -- have been for the indications such as for MEDALIST, BELIEVE, as well as COMMAND and BEYOND. And those 4, which is MDS and just beta-thal as being upwards of $2 plus billion. So I just wanted to sort of bucket that first.

And any additional indications that we develop, whether it is for platform drug in anemia with relation to chronic indications, [schema therapy], [noose] anemia, any other rare anemias that we may look at, including myelofibrosis is beyond the $2 plus billion that we've previously communicated.

So as we sort of finalize some of the newer indications then we'll be able to provide sort of bookends as to what the market potential for those would be, but I just wanted to frame it up right now for you as where those bookends are.

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Operator [19]

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Our next question comes from the line of Martin Auster from Credit Suisse.

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Tiago Felipe Fauth, Crédit Suisse AG, Research Division - Research Analyst [20]

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Hi, it's Tiago for Marty. So as we approach the PAH R&D deep dive, perhaps if you could provide some additional detail, what investors may expect in terms of details about the clinical development plan. And some initial color perhaps on the exploratory study and novel endpoints that you might be looking at to better outline sotatercept's potential impact in the disease.

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Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [21]

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John, you want to take that question?

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John D. Quisel, Acceleron Pharma Inc. - Executive VP, Chief Business Officer & Secretary [22]

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Sure. Hi, this is John Quisel. Yes, we're looking forward to this event. I think we plan to dive into some of the preclinical data that we expect to present at EHA just a week before that in November. And then as you mentioned, get into some of our plans in this exploratory study that we've recently announced.

And I think the way to think about that trial is we're taking our PULSAR trial, which is designed to provide a very efficient answer as to the efficacy of sotatercept in these patients in using the conventional endpoints, and add to that a set of more exploratory endpoints that should drive to the question of how sotatercept is uniquely affecting the course of disease in these patients by affecting BMPR2 signaling. And this is the key signaling pathway that has been identified as at the core of the disease.

So that study is going to have a couple different endpoints that we're going to dive into and provide detail around. And otherwise, we expect to have a panel of experts present to provide kind of a general overview of the treatment landscape and how sotatercept with its novel mechanism fits into that.

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Operator [23]

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Our next question comes from the line of Eric Joseph from JPMorgan.

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Eric William Joseph, JP Morgan Chase & Co, Research Division - Analyst [24]

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Just a quick on one MEDALIST. We've had a couple of incoming questions related to longer-term safety and whether there's any reason to think there's any potential impact on blast cell counts? Can you talk a little bit about sort of how blast cell count was monitored by the data monitoring committee, whether FDA is seeking any specific length of follow-up potentially beyond 48 weeks or potentially looking at AML transformation rate ahead of an NDA submission PDUFA action?

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Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [25]

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Eric, it's Todd. Thanks for your question. Yes. So as inclusion criteria, patients had to have blast cell counts below 5%. And so any increase above 5% would then have the patient transforming to a high-risk patient and then any blast count over 20% would then be an AML patient. So as you can imagine, in this patient population that's actively managed. And if there are any issues around that, they would need to be disclosed. And if there's any significant issues in that, we would have to stop the trial.

And so we feel really comfortable with the safety profile around all those blast cell count type increases and everything in the Phase 2 has already been reported around things and there doesn't look to be any signal there.

As far as really long-term, within the follow-up, we will be looking to have -- maybe we'll even have a potential benefit for patients around progression of AML. So we'll be looking at both that and overall survival over a multi-year follow-up within (inaudible).

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Robert K. Zeldin, Acceleron Pharma Inc. - Chief Medical Officer [26]

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I would concur with that. This is Robert. It would not be a surprise if as part of its review and final discussions with the agency that there were not a commitment for a longer-term follow-up of this patient population. I think that would be pretty much expected.

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Operator [27]

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Our next question comes from the line of Geoff Meacham from Barclays.

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Jason Eron Zemansky, Barclays Bank PLC, Research Division - Research Analyst [28]

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This is Jason on for Geoff. Just a question about as you think about moving from MEDALIST and BELIEVE to COMMANDS and BEYOND, I know you discussed moving out to different indications. But I'm just curious, is there something that gives you confidence that as you move, say, from second line MDS to first line or transfusion dependent beta-thal to non-transfusion dependent that the same level of efficacy that you saw in the earlier 2 trials are going to translate over into these broader populations or different patient populations.

And then I know it's early days and maybe the discussions aren't quite there yet, but have you looked at potential launch timelines and expectations? I'm just curious if you see any sort of hurdles with uptakes or have physicians kind of, in expectation of the trial readout, started asking and kind of what those discussions look like. If you could provide any color there.

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Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [29]

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Jason, this is Habib. Thanks for your questions. Two really separate questions there, right. One regarding lifecycle management and the development and the other one regarding potential launch, if we're approved, and the potential uptake in questions that we're getting.

So with respect to your first question, when we think about lifecycle management and where is this bullishness being derived from, the first thing is obviously success in the Phase III studies, right. But specifically in terms of the studies that are ongoing and why COMMANDS or other disease areas. So the first thing I would say to you is we have traditionally at Acceleron invested an awful lot in our Phase II development programs where we're learning a lot about the program, minimizing the differences and the changes as we learn in Phase II to confirm in Phase III.

And when we look at the Phase II data so far, for example, when you look at the ongoing expansion cohorts within luspatercept, and Todd made reference to some of the patients that would be very similar to the COMMANDS like patients that would be entering the study. And if you compare those to the data that was presented at ASH for the ESAs in 2 Phase III company-sponsored studies, we take tremendous amount of comfort that not only are we showing higher response rates in our Phase II, but we're doing that with an endpoint of transfusion independence versus the clinically meaningful endpoint of high E.

And similarly, if we look at what we're doing in myelofibrosis, for example, that was very much driven by an investigator-sponsored study from MD Anderson when they were looking at a similar compound of sotatercept where they actually showed response rates of 30% and 39% depending on when they were looking at monotherapy in myelofibrosis patients or those that are used in combination with ruxolitinib. And again, we've leveraged that information as we -- in designing our studies.

So on top of that, if you look even at our healthy volunteers study and the ability to make healthy red blood cells. We take tremendous amount of comfort that our ability to cast a wider net for luspatercept and to fulfill an unmet need in these patients who really have nothing else other than regular red blood cell transfusions to make up for that deficiency, that we have a tremendous amount of data that we're leaning on to give us that confidence as we continue to make further investments into the program.

Now with respect to timelines around launch, et cetera, what I can tell you -- and maybe I'll start it off, Sujay, and then hand it over to you, is that we do plan to submit for registration for both of our first indications of beta-thalassemia and lower risk MDS in the first half of 2019, both with the FDA as well as the EMA. And assuming a standard review process that would take us into the first half of 2020 for our launch.

That said, we are doing everything possible to be well prepared that in the event if there was a priority review that would take us into the tail end of next year. We will be prepared for that whether it's from a supply point of view, from a commercial infrastructure, et cetera, et cetera. But the expectation is for a first half of 2020 launch. Maybe Sujay, you can add a little bit of color in terms of what you and your counterparts at Celgene are doing as part of the joint commercial committee to ensure that we are exceptionally well prepared for those launch scenarios.

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Sujay Kango, Acceleron Pharma Inc. - Senior VP & Chief Commercial Officer [30]

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Thank you, Habib. Yes, absolutely. So through the joint commercialization committees we are working to ensure that we have, with a sense of urgency, the readiness to prepare for launch. So the standard approaches in understanding, as you asked, right, where the best patient population would be for the utility of the drug. We are understanding of that. The aspects around the distribution models that we utilize, the elements around patient journey and where those leverage points are to ensure we have broadest access possible for the patients, as well as awareness campaigns. All of those are being put into play and assessing those as we speak.

Once the data is disclosed, we'll have the more ability to engaging and understanding the impact of that data to really understand where the utilization of the product would be best suited. But most of it right now is preparing for the launch from all of these components.

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Operator [31]

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Our next question comes from the line of Kennen MacKay from RBC Capital Markets.

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Justin Hayward Burns, RBC Capital Markets, LLC, Research Division - Senior Associate [32]

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This is Justin on for Kennen. Thanks for taking the question and congratulations on the progress this quarter. We were just wondering as you think about enrollment into the COMMANDS trial as it relates to baseline EPO expression and why not go for sort of the lower hanging fruit in patients with anemia and high EPO levels, which we know would typically be poor responders to ESAs.

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Robert K. Zeldin, Acceleron Pharma Inc. - Chief Medical Officer [33]

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I can't imagine that that would be very well received by the scientific community, frankly. I think that it's appropriate to identify a population of patients who is reflective of that with the underlying disease, and not kind of cherry pick or try to bias the outcome. I think we're were doing exactly what's right. We're identifying the population that's in need of a therapy and going head-to-head, and expect to show results that are favorable and impactful for the patient.

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Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [34]

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Justin, it's Todd. I'd just add a little bit more to that. In the MEDALIST protocol, patients could be EPO ineligible up to any EPO level and so that captures those RS positive patients in those higher EPO levels where they could potentially use luspatercept. And then when we think about the overall epidemiology of the EPO breakdown levels across patients, the above 500 EPO, to Robert's point, is a real low percentage of patients. Our research suggests it's less than 15% of the patient population.

And so COMMANDS in the first line setting really captures a large majority of the appropriate patients in lower risk MDS.

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Operator [35]

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Our next question comes the line of Christopher Marai from Nomura. Your question please.

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Christopher N. Marai, Nomura Securities Co. Ltd., Research Division - MD and Senior Analyst of Biotechnology [36]

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I wanted to touch base on the anti-myostatin approaches and your potential progress in the future through the clinic with these. World Muscle and previously physicians have highlighted that there may be a problem with the approach in certain indications such as DMD, perhaps other disease states where myostatin is not heavily expressed anymore in the muscle. And so inhibiting myostatin would be a problem or wouldn't work.

So I was just wondering how are you looking at that, number one, from the perspective of treating diseased muscles currently in your trials? And then secondarily, the opportunities perhaps combined with the therapy with other efficacious therapies to augment treatment effect? Obviously, we can take lots of examples but would love to hear what you're thinking about there.

Chris, it's Todd. I'll start and maybe I'll ask Robert and Habib to add on. So from an approach of what diseases that we're going to go after, FSHD and CMT are the first 2 indications that we've gone after and those patients, unlike DMD that's not a dystrophinopathy. And so they don't have a fundamental protein issue in the muscle itself. So we've been very selective in the diseases that we go after first.

And so FSHD, as you probably already know, is an over-expression of a protein called DUX4 that becomes toxic to the muscle. And now, we've shown in Part 1 that we're able to increase that muscle mass of over 12% in patients. And CMT is an issue where it's a neuropathy so it's damage to the nerve, which is then leading to atrophy of the muscle. And there again in Part 1, we've been able to see really nice double-digit increases in muscle mass.

And so for Part 2, we're also interested in increasing the mass but very focused on both strength and functional outcomes there after 6 months of treatment. And so second half of next year as far as timing goes is going to be a really important readout for ACE-083. And then as far as we'll wait and see based off of those data if we decide to expand to other muscle diseases for ACE-083.

To your point exactly, companies that have taken a myostatin selective approach, which is very different than our myostatin plus of engaging more bad actors within the entire ActRIIB pathway, they've had negative to limited efficacy results in DMD. And so that might be a case where you want to do something with a gene therapy first to somewhat replace at least some percentage of that protein and then add on muscle mass and function building agent, like a myostatin plus, whether it be an ACE-2494 or one of the other agents being developed in the space.

And so we'll just have to wait and see, A, how gene therapy plays out, and then B, if one of these myostatin approaches would be then beneficial to complement that gene therapy approach long-term.

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Operator [37]

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Our next question comes from the line of Terence Flynn. Your question please.

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Holly Samantha Barra, Goldman Sachs Group Inc., Research Division - Business Analyst [38]

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This is Holly on for Terence. We were just wondering if you've had any preliminary discussions with payers now that you have the Phase III data. And if you could share your latest thoughts on pricing and reimbursement dynamics, and if there are any key differences in the way you're thinking about MDS versus beta-thal.

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Sujay Kango, Acceleron Pharma Inc. - Senior VP & Chief Commercial Officer [39]

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Hi, this is Sujay. Thanks for the question. So yes, we've had peer research conducted before on luspatercept before with target product profiles. And currently, as we believe based on the peer dynamics that the value we would bring with luspatercept based on the MEDALIST as well as the BELIEVE data that it would be reimbursed and there would be limited sort of challenges in relation to access to the patient community. So that's a viewpoint.

Of course, it's put in context with how do we price the drug. So we would look at the current sort of comparative therapies and the other MDS drugs that are out there in relation to the value we bring. And we look at the totality of the data as we think about pricing.

More than likely, as Celgene is going to be leading on the pricing side of the equation, our view is collectively that the pricing would be more likely disclosed more closer towards launch or at launch. So hopefully that answer your question in relation to -- your second part of the question is pricing differential between MDS and beta-thal.

At this stage, just by virtue of the actual dose between the target dose in MDS and beta-thal, there will be a differential between the price point. But we are going to launch it based on 2 -- the actual vials. So it will be priced the same but for the vial priced. But technically, the price for the patient would be different based on the dosage between beta-thal and MDS.

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Operator [40]

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(Operator Instructions) Our next question comes from the line of Jeff Hung with Morgan Stanley. Your question please.

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Jeff Hung, UBS Investment Bank, Research Division - Former Associate Director and Analyst [41]

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For ACE-083, you said that you think there's a threshold of 5% to 6% increase in muscle mass leading to functional benefit. Are there other aspects that patients control that might contribute to varying functional benefit amongst patients or do you think there's a more direct line from the peak increases in muscle mass to function?

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Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [42]

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Thanks, Jeff. It's Todd. So our hypothesis based off of other agents that were developed in other muscle diseases is that the threshold might be 5% to 6% for muscle mass increases that then leads to functional outcomes. And that's the reason why we're running the experiment. And so we'll just have to see if that plays out in our own trial here with Part 2.

So we're very encouraged by the muscle mass increases that we saw in Part 1 and we're encouraged by that, and we're hopeful that those peak increases will then lead to translating into functional outcomes for those patients that today FSHD patients only have bracing and crutches, and same with the CMT patients. So that for various reasons isn't optimal when they think about going about walking for example.

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Operator [43]

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This does conclude the question and answer session of today's program. I'd like to hand the program back to Habib Dable for any further remarks.

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Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [44]

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Thanks, everybody, for joining the call today and we look forward to seeing you at upcoming investor conferences and ASH. So have a great evening and please reach out to Todd if you have any additional questions.

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Operator [45]

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Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Have a good day.