U.S. Markets open in 3 hrs 9 mins

Edited Transcript of XLRN earnings conference call or presentation 2-Aug-18 9:00pm GMT

Q2 2018 Acceleron Pharma Inc Earnings Call

Cambridge Aug 14, 2018 (Thomson StreetEvents) -- Edited Transcript of Acceleron Pharma Inc earnings conference call or presentation Thursday, August 2, 2018 at 9:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* 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

================================================================================

Conference Call Participants

================================================================================

* 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

* Edward Patrick White

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* Eric William Joseph

JP Morgan Chase & Co, Research Division - Analyst

* Geoffrey Craig Porges

Leerink Partners LLC, Research Division - Director of Therapeutics Research, MD & Senior Biotechnology Analyst

* Greg Harrison

* Jason Eron Zemansky

Barclays Bank PLC, Research Division - Research Analyst

* Terence C. Flynn

Goldman Sachs Group Inc., Research Division - MD

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good afternoon, ladies and gentlemen, and welcome to Acceleron Second Quarter 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference may be recorded.

I would now like to hand the call over to Mr. Todd James, Vice President, Investor Relations and Corporate Communications at Acceleron. Please go ahead.

--------------------------------------------------------------------------------

Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [2]

--------------------------------------------------------------------------------

Thanks, and welcome, everyone, to our second 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 Investor (sic) [Investors] and Media page of 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 second 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.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Thanks, Todd, and good afternoon, everyone, and thank you for joining us today. We had a successful and important quarter, and I'm very proud of our team's execution and program advancement in our focused therapeutic areas: hematology, [neuromuscular]

(technical difficulty)

positioned us to build therapeutic area leadership and deliver innovative medicines to patients with serious and rare diseases. We look to carry this momentum forward throughout 2018 and beyond.

As you know, we recently announced positive top line results from the MEDALIST and BELIEVE trials of luspatercept. This is a very exciting achievement for our team as it is our first internally discovered therapeutic to have positive Phase III results across 2 distinct chronic anemia indications. I will jump into more detail on this in a minute.

We also achieved critical milestones across our wholly-owned pipeline, including the recent Part 1 Presentations of ACE-083's Phase II trials in Charcot-Marie-Tooth disease or CMT and facioscapulohumeral muscular dystrophy or FSHD. Part 2 of each trial is now underway, and we recently initiated the PULSAR trial for sotatercept in Phase II in patients with pulmonary arterial hypertension or PAH.

Turning now to luspatercept and hematology. We are very excited about the recent news for luspatercept, our first-in-class erythroid maturation agent to treat late-stage maturation defect in multiple serious hematologic diseases. A few weeks ago, and along with our collaboration partner, Celgene, we reported positive top line results for MEDALIST and BELIEVE Phase III trials in patients with low to intermediate risk myelodysplastic syndromes or MDS and transfusion-dependent beta-thalassemia, respectively. These data had been long anticipated, and we were thrilled that luspatercept met all primary and key secondary endpoints across the 2 pivotal trials.

The Phase III data will be submitted to a future medical meeting for presentation in late 2018. And we also plan to submit regulatory applications in the U.S. and EU during the first half of 2019.

We recently presented updated results from our ongoing Phase II trials in lower-risk MDS and beta-thalassemia at the 2018 ASCO Annual Meeting and the 23rd Congress of the EHA. The Phase II trials continue to highlight robust response rates and long-term duration of patient benefit with the favorable safety profile. We continue to be encouraged and observe multiple patients remaining on treatment in both studies through 3 years who continue to sustain clinically-meaningful increases in hemoglobin and red blood cell transfusion reduction.

We continue to invest in expanding the overall market opportunity with luspatercept. And with the upcoming start of the COMMANDS trial, we will have 7 ongoing clinical trials across 5 indications in MDS, beta-thalassemia and myelofibrosis.

In the COMMANDS Phase III trial, we will evaluate luspatercept head-to-head versus the current standard of care, epoetin alfa, with a goal of showing superiority in patients with lower-risk MDS who are treatment

(technical difficulty)

We also have 2 ongoing Phase II trials in patients with non-transfusion-dependent beta-thalassemia and myelofibrosis. As I've stated before, our top corporate priority is advancing luspatercept and building leadership in chronic anemia. Considering the positive results in 2 distinct hematologic diseases, luspatercept has the potential to be a platform treatment for chronic anemias.

To that effect, Acceleron and Celgene are actively evaluating a number of opportunities in addition to the 5 indications currently in clinical development. Our goal is to fully maximize luspatercept's availability to the many patients suffering from anemia through expanded clinical development and life-cycle management plans.

With the current indications under development alone, we estimate that luspatercept has the potential to address over 120,000 patients in the U.S. and EU. So as you can see, there is a significant opportunity for luspatercept to affect the lives of many patients with chronic anemia.

Before I turn over the presentation, I also want to highlight 2 key hires in our clinical development organization. First, I want to welcome and introduce our new Chief Medical Officer, Robert Zeldin. Robert joins us from Ablynx, where he served as Chief Medical Officer and led the development of caplacizumab until the company was recently acquired by Sanofi. He brings over 20 years of industry experience, including senior roles at Merck, Novartis and the FDA. He will be instrumental in advancing our corporate strategy and leading clinical development.

I'm also pleased to welcome Janethe Pena as our therapeutic area Head of Pulmonary. Janethe comes to us from Bayer, where she most recently led the Pulmonary Clinical Development Group. At Bayer, she was responsible for leading the clinical trials of riociguat in several pulmonary hypertension indications. Dr. Pena joins Acceleron at an important time as we advance luspatercept to clinical trials in PAH and investigate additional potential indications for our pulmonary pipeline.

I will now pass the presentation over to Robert who will discuss our neuromuscular and pulmonary pipeline progress for the quarter.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Thanks, Habib, and good afternoon, everyone. I'm delighted to have joined the Acceleron team. As a drug developer and clinical trialist, I believe our pipeline of TGF-beta therapeutics has the potential to significantly impact areas of high unmet medical need as evidenced by the recent positive Phase III readouts for luspatercept.

In neuromuscular, we've made significant progress with ACE-083, our locally-acting Myostatin+ agent designed to increase muscle mass and the strength of target muscles for diseases that cause focal muscle weakness. The FDA recently granted ACE-083 both Fast Track status and Orphan Drug designation for FSHD.

In October, we plan to present an update from Part 1 of our Phase II FSHD trial, which will include results from dose cohort 3. Part 2 of the trial is ongoing.

In CMT, we recently presented Part 1 results from the Phase II trial at the 2018 Peripheral Nerve Society Meeting, where ACE-083 achieved increases in mean total muscle volume of more than 12% in the tibialis anterior at each of the 3 dose levels. We also observed mean absolute improvement in fat fraction ranging from 1.7% to 3.5%.

We are encouraged by the results and are pleased to announce the initiation of the placebo-controlled Part 2 of the trial. Enrollment and treatment are ongoing in the Phase I healthy volunteer trial of ACE-2494, our systemic Myostatin+ agent.

The pulmonary program represents a key pillar of our clinical development strategy, and we're pleased to have recently initiated the PULSAR Phase II trial with sotatercept in patients with PAH. The primary endpoint is an assessment of pulmonary vascular resistance over a 6-month treatment period. Key secondary endpoints include 6-minute walk distance, clinical worsening, change in World Health Organization functional class and change in quality of life. We are also planning an exploratory imaging study at a number of PAH Centers of Excellence in the U.S.

In this study, we'll be exploring possible endpoints for our potential future trials in PAH. We hope you will join us in New York in November where we are planning a research and development deep-dive events to cover PAH. The event will include internal and external expert presentations 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. Please be on the lookout for additional details as we get closer to November.

With that, I look forward to meeting with many of you at upcoming investor meetings or medical conferences and will now turn the call over to Kevin McLaughlin, our Chief Financial Officer, to run through the financials for the quarter.

--------------------------------------------------------------------------------

Kevin F. McLaughlin, Acceleron Pharma Inc. - CFO, Senior VP & Treasurer [5]

--------------------------------------------------------------------------------

Thanks, Robert. Good afternoon, everyone. Our cash, cash equivalents and investments as of June 30, 2018, were $332.3 million. This compares to December 31, 2017, cash, cash equivalents and investments of $372.9 million. 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 second quarter was $3.7 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 second quarter were $33.6 million. This includes R&D expenses of $25.9 million and G&A expenses of $7.7 million.

The company posted a net loss for the second quarter ended June 30, 2018, of $28.9 million.

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

--------------------------------------------------------------------------------

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [6]

--------------------------------------------------------------------------------

Thanks, Kevin. For hematology, we expect to present MEDALIST and BELIEVE Phase III trial data at an upcoming medical meeting by year-end 2018, file applications to the U.S. and EU regulatory authorities in the first half of 2019 and to initiate the COMMANDS Phase III trial this quarter.

In neuromuscular, we expect to present preliminary results for Part 1 of the ACE-083 Phase II FSHD trial for all dose escalation cohorts in October 2018 and to report preliminary results from Part 2 of the trial in the second half of 2019. We further expect to report preliminary results from Part 2 of the ACE-083 CMT trial by year-end 2019.

ACE-2494 Phase I results remain on track for the first half of 2019.

In pulmonary, we plan to provide preliminary results from the PULSAR Phase II trial in the first half of 2020 and additionally, plan to initiate an exploratory imaging study in the first quarter of 2019.

As you can see, we are actively advancing multiple programs as we push toward our goals to be a fully integrated biopharmaceutical company and to have 3 programs in Phase III development by the end of 2020.

I will now open the call up to questions. Operator?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) And our first question will come from the line of Carter Gould with UBS.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Congrats in all the progress and the luspatercept [wins]. Habib, you laid out a clear strategy at your R&D day last year. And now with the luspatercept, you're risking data in hand in consideration of the downstream economics. What give you kind of confidence to move to accelerate or broaden the strategy on some of your investments beyond what you've previously outlined?

And then secondly, I was hoping you can comment a little bit on the exploratory imaging study in PAH. I'm assuming that will be cardiac MRI focused. Can you talk about the strategy there and the importance of that? Is that more about helping demonstrate biological proof of concept? Or potentially about laying the groundwork for incorporation of imaging endpoints into Phase III?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Great. Carter, thanks a lot, appreciate the questions. So first of all, with respect to the data, obviously, we're all thrilled with the recent announcements for both Phase IIIs. With respect to your questions specifically, though, in terms of the strategy that was laid out, I would say that this is par for the course in terms of our expectations. We have been planning for success with luspatercept. We have committed to, in September, to treat therapeutic areas and hematology, neuromuscular as well as pulmonary. And with the ongoing clinical development programs and the commitments that we've been making to them, on top of our anticipation of moving forward our preclinical pipeline, we feel very comfortable that we are making all of the appropriate investments within those therapeutic areas for leadership.

That said, as we continue to gain more and more confidence within our portfolio, as I've also said before, one of the things that results to our commitment to these specific therapeutic areas -- and I would argue that in most of the areas that we're in, we are focusing on areas where there are little to no pharmacology solutions. And we are also just proportionately gaining insights in many aspects of the disease, whether that's in terms of understanding the way payers are thinking about endpoints. If we understand about the way investigators are thinking about clinical trials design, et cetera, et cetera, we also are positioning ourselves well to hopefully become a partner of choice in these disease areas that we've declared, and we will also simultaneously be looking at inorganic growth opportunities. And obviously, with the success of luspatercept, that will give us, hopefully, incremental firepower as we start thinking about inorganic opportunities for growth as well.

With respect to your second question in terms of the exploratory study, right now, I can tell you that there are a number of things that will -- that we can benefit from, from this exploratory studies. For example, in terms of helping us in another way in terms of thinking about Phase III endpoints once we get to that point. Beyond that, I would really encourage all of you to kind of save the date or look for the save the date in November where we plan to host, I guess, a seminar in November. That date is yet to be determined. And we will provide a lot more details in terms of what the objective of the exploratory study will be and what -- some of the dynamics of that. I'm not sure if there's anything else you want to add to that, John.

--------------------------------------------------------------------------------

John D. Quisel, Acceleron Pharma Inc. - Executive VP, Chief Business Officer & Secretary [4]

--------------------------------------------------------------------------------

You summarized it very well.

--------------------------------------------------------------------------------

Operator [5]

--------------------------------------------------------------------------------

The next question will come from the line of Geoff Porges with Leerink.

--------------------------------------------------------------------------------

Geoffrey Craig Porges, Leerink Partners LLC, Research Division - Director of Therapeutics Research, MD & Senior Biotechnology Analyst [6]

--------------------------------------------------------------------------------

I wanted to get a little color, if I could.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Geoff, I think there's something wrong with your line. We're only getting a few words from you.

--------------------------------------------------------------------------------

Geoffrey Craig Porges, Leerink Partners LLC, Research Division - Director of Therapeutics Research, MD & Senior Biotechnology Analyst [8]

--------------------------------------------------------------------------------

Okay, let me try that. Is that better?

--------------------------------------------------------------------------------

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [9]

--------------------------------------------------------------------------------

Much better, thank you.

--------------------------------------------------------------------------------

Geoffrey Craig Porges, Leerink Partners LLC, Research Division - Director of Therapeutics Research, MD & Senior Biotechnology Analyst [10]

--------------------------------------------------------------------------------

All right. I wonder if you can give me a little color about other observations you have from this clinical dataset. You've got a lot more experience now with luspatercept and have a pretty good idea presumably about what some of the secondary metabolic and hematologic effects have and what symptomatic response frankly patients have experienced while on the medicine. Could you give us a little sense of any of those observations from the study dataset?

--------------------------------------------------------------------------------

Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [11]

--------------------------------------------------------------------------------

Yes. Geoff, it's Todd. So at this point, outside of the top line results, all of that will need to wait for the Medical Congress that we present late this year.

--------------------------------------------------------------------------------

Geoffrey Craig Porges, Leerink Partners LLC, Research Division - Director of Therapeutics Research, MD & Senior Biotechnology Analyst [12]

--------------------------------------------------------------------------------

Well, can I just push on that a little bit and say, is there anything there that would suggest other indications that you could pursue now that you have these positive -- strongly positive results in the initial 2 indications?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

So I would say that it's really -- we feel like we're in a good spot to have 2 positive readouts in 2 very -- 2 distinct diseases. And so when we think about expansion opportunities, no reason to think that any potential anemia shouldn't be evaluated for potential future development. So that's where we are today. And we look forward to providing an update as soon as we make those decisions for our future investments.

--------------------------------------------------------------------------------

Operator [14]

--------------------------------------------------------------------------------

And the next question will come from the line of Eric Joseph with JPMorgan.

--------------------------------------------------------------------------------

Eric William Joseph, JP Morgan Chase & Co, Research Division - Analyst [15]

--------------------------------------------------------------------------------

Just a couple from me. First, with respect to the regulatory filings with luspatercept, were there any sort of special considerations with respect to review timelines, considering it will be a dual indication filing? I have a follow-up on ACE-083.

--------------------------------------------------------------------------------

Robert K. Zeldin, Acceleron Pharma Inc. - Chief Medical Officer [16]

--------------------------------------------------------------------------------

I'll take that one. It's Robert Zeldin. I don't think that the -- the fact that [we'll] be filing for both MDS and beta-thalassemia is likely to impact review timelines. Of course, it will be up to the agency. Based on the process, we'll, of course, in the U.S., request prior to review and the agency will inform us of their acceptance of that proposal within the usual time period for such a feedback, which is, if I recall correctly, 60 days.

--------------------------------------------------------------------------------

Eric William Joseph, JP Morgan Chase & Co, Research Division - Analyst [17]

--------------------------------------------------------------------------------

Okay. And just have you been wondering if you could set the stage a little bit heading into final Part 1 data with ACE-083 and FSHD, whether functional or strength measures will be a part of that presentation? How should we be thinking about the read-through value of those data to the randomized Part 2 portion in 2019?

--------------------------------------------------------------------------------

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [18]

--------------------------------------------------------------------------------

Thanks for the question, Eric. It's Habib again. So yes, so just to be clear, Part 1 of the study both for FSHD and CMT had been designed to address and to answer questions regarding safety tolerability as well as increases in muscle mass. And based on the data that we've seen in Part 1, we have been encouraged for both diseases to proceed into Part 2, where it is specifically designed for both diseases to look in a randomized placebo-controlled fashion and answering the question as to whether or not we could translate these findings in Part 1 into a functional benefit, and that's what Part 2 will be designed. So absolutely, there will be no findings that -- and with respect to Part 1 in terms of strength and function that will be discussed.

--------------------------------------------------------------------------------

Eric William Joseph, JP Morgan Chase & Co, Research Division - Analyst [19]

--------------------------------------------------------------------------------

Okay, got it. Maybe just a final housekeeping question. Just with any regulatory milestones tied to luspatercept that we might anticipate in 2019, should we be thinking about those on acceptance or on final approval?

--------------------------------------------------------------------------------

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [20]

--------------------------------------------------------------------------------

Yes. So the [regular] -- just to remind everyone, there's currently $185 million in outstanding milestones, $85 million are commercial and $105 million, regulatory. And the next payment due is $25 million upon acceptance of the filing.

--------------------------------------------------------------------------------

Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [21]

--------------------------------------------------------------------------------

Eric, it's Todd. [We expect the remaining] $80 million of the regulatory milestones after that to [be regions specific] for approvals.

--------------------------------------------------------------------------------

Operator [22]

--------------------------------------------------------------------------------

The next question will come from the line of Robyn Karnauskas with Citi.

--------------------------------------------------------------------------------

Greg Harrison, [23]

--------------------------------------------------------------------------------

This is Greg Harrison on for Robyn. For your muscle programs, kind of a big-picture question. There's more people in the space right now and a lot of them are targeting Myostatin. Can you help us understand how you're differentiated as far as target, safety, et cetera? And how do you think the market will shape up?

--------------------------------------------------------------------------------

Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [24]

--------------------------------------------------------------------------------

Greg, it's Todd. Yes, so thanks for the question. Yes, so we have a pretty differentiated approach with our franchise. ACE-083 is the only locally-acting muscle agent that we're aware of. And that's not just a Myostatin inhibitor. It hits other TGF-beta ligands that are important in the pathway for -- that are negative regulators of muscle mass. And as far as efficacy in that program, there's no systemic program that's ever shown -- increased the muscle mass anywhere close to what we've seen in ACE-083 now in 2 diseases, in FSHD and CMT. So pretty open space for us there as far as a locally acting agent goes. And then with the systemic molecule ACE-2494, again, another Myostatin+ so hitting more than just GDF-8 where historically companies have been fairly selective around targeting GDF-8. More recently, Novartis' program, bimagrumab, which had a setback in a Phase III trial in sporadic inclusion body myositis but continues to be developed in other diseases for Novartis. Regeneron combined a Myostatin selective antibody with an activin A antibody so similar to our Myostatin+ Approach but are ligand trap, mops up additional ligands that are important in the pathway. And as far as disease areas, we haven't identified the area where we'll go first with ACE-2494. At R&D Day, we gave 4 that we're evaluating currently, which are ALS, DMD, SMA and FSHD in the systemic fashion and -- so stay tuned. Based off of the outcome of our Phase I, we'll give more color on where we'll be going there but absolutely more activity in the systemic space but depending on what diseases each company picks, might not even be competitive.

--------------------------------------------------------------------------------

Operator [25]

--------------------------------------------------------------------------------

The next question will come from the line of Martin Auster with Credit Suisse.

--------------------------------------------------------------------------------

Unidentified Analyst, [26]

--------------------------------------------------------------------------------

This is Mark on for Marty. So my question is feedback from clinicians related to the MDS are typically matching up the MDS market as historically underserved. And so given this, how do you plan on increasing disease awareness? And can you speak to how you see -- or what you see the uptake curve looking like?

--------------------------------------------------------------------------------

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [27]

--------------------------------------------------------------------------------

Yes, thanks for the question. Perhaps I'll kick things off. This is Habib, and then I'll pass it on to our Chief Commercial Officer, Sujay Kango. Obviously, we are thrilled to potentially be a -- the first-approved pharmacology solution in this disease area. As you can imagine, the unmet need is huge. These patients have been suffering from chronic anemia for many years in certain instances and are either on chronic transfusions or are having to use off-label ESAs for a period of time until they no longer work.

And so as you can imagine, there's a number of things that we're going to be engaged in as we prepare for the potential launch of luspatercept. And one of those things, as you rightfully say, is increasing disease awareness. And together with Celgene, we'll be making significant investments as we think about how we, together as a collaboration, are going to increase the awareness in this disease area. And I can tell you there are a number of activities that are ongoing today in terms of helping us continue to gain a better understanding of exactly what that baseline is and how we'll be able to help and facilitate better awareness in this area. And Sujay, perhaps you can make a couple of comments in terms of some of the specifics that we're working on now.

--------------------------------------------------------------------------------

Sujay Kango, Acceleron Pharma Inc. - Senior VP & Chief Commercial Officer [28]

--------------------------------------------------------------------------------

Sure. Thank you, Habib, and great question over there. Clearly, within the low-risk to intermediate MDS, there is, as you pointed out, a need for really new treatments to alleviate the transfusion burden. And so a lot of the effort has been in relation to starting educational campaigns with regards to the science behind why MDS and beta-thal are slightly different in relation to the biology such as ineffective erythropoiesis and thus require a different kind of an approach for treatment for benefit of reduction in transfusions. So a lot of the effort is around starting now that the Phase IIIs are positive in relation to that as well as really understanding where the drivers are for the patient benefits to focus on that effort as well.

So more to come on that, but you can rest -- be assured that a lot of efforts from Celgene and us are on -- needed educational campaigns in relation to all of these factors to ensure that patients get the best treatment choices moving forward in relation to MDS.

--------------------------------------------------------------------------------

Operator [29]

--------------------------------------------------------------------------------

The next question will come from the line of Geoff Meacham with Barclays.

--------------------------------------------------------------------------------

Jason Eron Zemansky, Barclays Bank PLC, Research Division - Research Analyst [30]

--------------------------------------------------------------------------------

This is Jason Zemansky on for Geoff. Real quickly, I mean, you talked a little bit about the education campaign. But just in terms of potential approval, what should we be thinking about in terms of the launch, especially given the number of expansion indications that could possibly follow? And then just a quick follow-up on the ACE-083 program and FSHD. It looks like there's a lot of regulatory support, both with the fast-track designation as well as the orphan designation. Is there any chance you think, or would the agency be more willing to potentially approve the agent if there's a threshold muscle mass or [strengthening] in terms of the Phase II results? Or is the expectation now that you would still need a Phase III?

--------------------------------------------------------------------------------

Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [31]

--------------------------------------------------------------------------------

Thanks, Jason. It's Todd. I'll take the ACE-083 part, and I'll kick it over to Habib about -- how you can think about the ramp. So yes, in this disease, nothing for these patients except for physical occupational therapy embracing, which both not ideal for the patient. Our base case is that we would absolutely need to do a Phase III pivotal, but let's see what the Phase II data looks like always, at least a small chance that you might be able to do something with that, but base case is for our pivotal at where we sit today.

--------------------------------------------------------------------------------

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [32]

--------------------------------------------------------------------------------

Right. And then in terms of your other question in terms of the luspatercept opportunity. So a few things. So we and Celgene have agreed that right now when you look at the first 4 indications of MEDALIST, BELIEVE, BEYOND and COMMANDS, that there's a risk-adjusted opportunity of over $2 billion in sales. That's the first thing. Regarding the specific ramp-up, obviously, the preliminary indications of MEDALIST and BELIEVE are going to be the drivers in the first countries of launch.

With respect to [BEYOND that], again, I think you've heard both Celgene and us discuss this concept of luspatercept potentially becoming a platform drug. And I can tell you right now that we are actively looking at a number of indications beyond the first 4 that I have just discussed. For example, myelofibrosis. We've already initiated a myelofibrosis study where we're looking at recruiting 70 patients, both looking at monotherapy because of the disease-induced anemia as well as in combination with ruxolitinib due to disease-induced anemia as well as drug-induced anemia.

I think you've also recently heard based on some of the commentary from Celgene as well that now with the deal that they have recently exercised on fedratinib, that we'll also be looking at opportunities in combining luspatercept and fedratinib and those discussions are also ongoing.

On top of that, we're also looking at other opportunities where we believe now that, as Todd has mentioned, that we have now been able to validate luspatercept's mechanism of action in 2 distinct disease areas, we also want to take and perhaps cast a wider net and take a look at other diseases in other areas where patients are suffering from chronic anemia where we believe that luspatercept could have a benefit. So that basically the way we're thinking about the opportunity and the staging of the ramp-up and the subsequent launches.

--------------------------------------------------------------------------------

Operator [33]

--------------------------------------------------------------------------------

And the next question comes from the line of Christopher Marai with Nomura Instinet.

--------------------------------------------------------------------------------

Christopher N. Marai, Nomura Securities Co. Ltd., Research Division - MD and Senior Analyst [34]

--------------------------------------------------------------------------------

First, just touching upon 083 and then 2494. We've received some questions just on [the case] of bleeding risk experience with your prior Myostatin+ Approach. Could you clarify how you may have corrected that with 2494?

And then also, when you look at bringing that into new indications, that is 2494, could you look at bringing it into FSHD and CMT, sort of learning from what you've done in 083 or -- How should we think about the path forward for that molecule? And then I have a follow-up.

--------------------------------------------------------------------------------

Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [35]

--------------------------------------------------------------------------------

Chris, it's Todd. Yes, so the bleeding risk was really around our first-generation ActRIIB ligand trap, it also, on top of the negative regulators of muscle mass in the pathway, it also mopped up BMP9, which had an impact on the vasculature. And so what we're able to do with ACE-083, that's designed off a naturally-occurring ligand trap called follistatin, so that doesn't bind to BMP9. And then we also made it to be local to the muscle that you inject it into so no systemic activity there. So that also lowers any type of AE risk for the molecule. And then for 2494, we actually -- it's an IntelliTrap molecule. And so it actually mirrors the natural receptor pair of ActRIIB and ALK4, and so BMP9 does not signal through that receptor pair. And so that ligand trap does not pick up BMP9. And so based off of that, no, we shouldn't think that we'd have any of that activity in the new programs.

As far as disease areas, CMT is a very focal muscle disease. And so with a systemic molecule like 2494, really no interest to take it into there. FSHD, as patients progress, additional muscle groups do become involved in the disease. And so that could be an interesting opportunity for the systemic molecule, so that remains on the list of diseases that we're evaluating as well as ALS, SMA and DMD for the molecule for the future.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Got it. And then with respect to just next data sets for 083, is that something we should expect at World Muscle? Then finally -- or more on your R&D day. I [guess], finally, on the R&D Day, kind of like it's more PAH focused. Is the shift in the company's general focus away from the Myostatin+ Approach towards PAH? Or [some excitement in that program] that's driving this? Or is it that the muscle Myostatin program that could be potentially large or something that you guys want to maybe partner out like you did with luspatercept?

--------------------------------------------------------------------------------

Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [37]

--------------------------------------------------------------------------------

Chris, it's Todd again. Yes, so the -- for October, which there's a major medical conference, which you mentioned, World Muscle Society, so you could absolutely expect there to be an update for 083 there for -- that includes the third dose cohort, which we haven't yet presented publicly, the 240 mg in the tibialis anterior and the 200 mg -- sorry, the 200 mg bilaterally in the tibialis anterior and the 240 meg unilaterally in the bicep.

As far as the research and development deep-dive, pulmonary is the new area for us, and so we wanted to help educate folks, [hence], we're just doing a specific little deep dive just on that pulmonary area but no reason specifically. Each program is on its own communication plan as data and trials kick off at different times. So we plan different things around that similar to luspatercept, us always doing something typically around ASH or EHA. It's just based off of when things fall into calendar.

--------------------------------------------------------------------------------

Christopher N. Marai, Nomura Securities Co. Ltd., Research Division - MD and Senior Analyst [38]

--------------------------------------------------------------------------------

Got it. And then the cohort 3 data at World Muscle, is that going to be something that will help [define] the registrational path forward. That's my last question.

--------------------------------------------------------------------------------

Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [39]

--------------------------------------------------------------------------------

Yes. I think Part 2 of the trial, which is already ongoing, is really going to be the key data that tells us about the future of the molecule, which you can expect in the second half of next year. So as a reminder, 56 patients, 28 in each muscle group, bicep tibialis anterior 1:1 so 14 active, 14 placebo in each muscle. And at 24 weeks, we'll look at muscle mass and various functional outcomes.

--------------------------------------------------------------------------------

Operator [40]

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Unidentified Analyst, [41]

--------------------------------------------------------------------------------

This is Justin on for Kennen. I was wondering if you can provide some color on biomarkers for frontline MDS trial and the design of that trial? What biomarkers you're looking at, if any?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Thanks for your question, Justin. So for the COMMANDS trial, we're -- be kicking it off just here next month in the end of the third quarter. And once we get that up and running, things are on ClinicalTrials.gov, we'll be in a place to talk more about biomarkers and various endpoints, trial size, et cetera.

--------------------------------------------------------------------------------

Operator [43]

--------------------------------------------------------------------------------

The next question comes from the line of Terence Flynn with Goldman Sachs.

--------------------------------------------------------------------------------

Terence C. Flynn, Goldman Sachs Group Inc., Research Division - MD [44]

--------------------------------------------------------------------------------

I know you don't want to comment directly on luspatercept pricing at this point, but maybe you can just remind us of what you said in the past. And also any key inputs that you're thinking about post the data here. And then on the patient mix, again, just remind us commercial versus Medicare, Medicaid as we think about the rollout here.

--------------------------------------------------------------------------------

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [45]

--------------------------------------------------------------------------------

Yes, Terence, this is Habib. Thanks for your question. I'll kick it off and then hand it off to our Chief Commercial Officer, Sujay. At the end of the day, right now, we obviously have the benefit of 2 Phase III studies. We are going to take a good look at that dose data set, and we'll be engaging with research with the various pairs around the world. And we will be able to hopefully, at the end of that, be able to articulate a very clear pricing strategy in the future. Beyond that, and in terms of answering a couple of your other questions, I'd like to pass it over to Sujay in terms of some of the key insights.

--------------------------------------------------------------------------------

Sujay Kango, Acceleron Pharma Inc. - Senior VP & Chief Commercial Officer [46]

--------------------------------------------------------------------------------

Sure. So one of the key questions was in relation to the split between commercial payers and Medicare population for MDS. So for the initials, since it's a disease of the elderly, largely speaking, what we see is there's going to be more than likely a 70% Medicare versus 30% commercial class split. That's our initial going-in assumption for it. So it will be about a 70-30 split for MDS. That's not going to be the case for beta-thal, which is a different opportunity, younger patient population. So okay.

--------------------------------------------------------------------------------

Operator [47]

--------------------------------------------------------------------------------

And our next question comes from the line of Ed White with H.C. Wainwright.

--------------------------------------------------------------------------------

Edward Patrick White, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [48]

--------------------------------------------------------------------------------

So most of my questions were asked, but I just wanted to see -- you talk about the need for marketing and the educational campaigns, et cetera, et cetera. And along with the sales and marketing efforts, when can we see a more material investment and an impact on the SG&A line? I was -- are you thinking more that should be after the submission? Or around the submission date? Or looking to maybe later in 2019 or 2020?

--------------------------------------------------------------------------------

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [49]

--------------------------------------------------------------------------------

This is Habib. Thanks for your question. So yes, we will be engaging in a number of activities now specifically as we prepare for launch and specifically in North America. But I do want to remind you that in terms of -- specifically, the accounting impact associated with that is going to be quite minimal because the contract with Celgene is basically they are funding our commercial efforts in North America and the subsequent investments that we'll be making as we jointly commercialize luspatercept in North America.

--------------------------------------------------------------------------------

Operator [50]

--------------------------------------------------------------------------------

And I'm showing no further questions. I would now like to turn the conference back over to Mr. Habib Dable for any closing remarks.

--------------------------------------------------------------------------------

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [51]

--------------------------------------------------------------------------------

Yes, no, thank you, everyone, for joining us in the call. Thank you for your continued interest. We as a company are obviously thrilled with the latest results of the 2 Phase IIIs, and then we very much look forward to expanding upon the details of those results at an upcoming congress by year-end. And so with that, thank you again and wishing you all a great evening.

--------------------------------------------------------------------------------

Operator [52]

--------------------------------------------------------------------------------

Ladies and gentlemen, thank you [for participating in today's conference. This does conclude your program. You may all disconnect. Everyone, have a great day.]