U.S. Markets closed

Edited Transcript of XLRN earnings conference call or presentation 9-May-19 9:00pm GMT

Q1 2019 Acceleron Pharma Inc Earnings Call

Cambridge Jun 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Acceleron Pharma Inc earnings conference call or presentation Thursday, May 9, 2019 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. - Senior VP, CFO & Treasurer

* Sujay R. Kango

Acceleron Pharma Inc. - Senior VP & Chief Commercial Officer

* Todd James

Acceleron Pharma Inc. - VP of IR & Corporate Communications

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

Conference Call Participants

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

* Andrew Scott Berens

SVB Leerink LLC, Research Division - MD of Targeted Oncology & Senior Research Analyst

* Carter Lewis Gould

UBS Investment Bank, Research Division - Large Cap Biotech Analyst

* Gregory Allen Harrison

Barclays Bank PLC, Research Division - Research Analyst

* Ishmael Izakiel Gyimah Asante

Morgan Stanley, Research Division - Research Associate

* Kennen B. MacKay

RBC Capital Markets, LLC, Research Division - Co-Head of Biotechnology Research

* Lisong Ai

Cowen and Company, LLC, Research Division - Research Analyst

* Nirav Y. Shelat

Piper Jaffray Companies, Research Division - Research Analyst

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

Presentation

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

Operator [1]

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

Good afternoon, ladies and gentlemen, and welcome to the Acceleron First Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I'd 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 First Quarter 2019 Earnings 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 of the corporate website at www.acceleronpharma.com. Joining me for the call today are Habib Dable, our Chief Executive Officer; Kevin McLaughlin, our Chief Financial Officer; John Quisel, our Chief Business Officer; and Sujay Kango, our Chief Commercial Officer.

As a reminder, we will be making forward-looking statements regarding our financial outlook in addition to regulatory and product development plans and research activities. These statements are subject to risks and uncertainties that may cause actual results to 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'd now like to turn the call over to Habib Dable, our Chief Executive Officer.

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

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

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

Great. Thank you, Todd, and good afternoon, everyone, and thank you for joining us today.

We made significant progress across the entire pipeline, positioning Acceleron to execute effectively over a year that will include key milestones in all of our clinical programs. In fact, because of this progress, I'm pleased to say that today we have one of the industry's most advanced TGF-beta superfamily-based pipelines spanning 3 disease areas.

Let's begin with luspatercept, our first-in-class erythroid maturation agent in hematology. We and our global collaboration partner, Celgene, recently submitted marketing applications in the U.S. and EU in lower-risk myelodysplastic syndromes, or MDS, and transfusion-dependent beta-thalassemia based on the positive Phase III safety and efficacy results from the MEDALIST and BELIEVE trials that we reported last year.

If approved, this will be the first Acceleron-discovered drug to be available for patients. And I could not be more excited or proud of all of the effort and work the teams have dedicated to this program to reach this point.

We are also evaluating luspatercept in additional MDS and beta-thalassemia patient populations in the COMMANDS and BEYOND trials and are conducting a trial in patients with myelofibrosis-associated anemia.

In neuromuscular disease, we are currently evaluating our locally acting therapy, ACE-083, in 2 Phase II trials for FSHD and CMT, diseases that are both associated with slowly progressing focal muscle weakness leading to meaningful loss of function, for which there are no approved medicines.

In pulmonary disease, both our PULSAR and SPECTRA trials are evaluating sotatercept in patients with pulmonary arterial hypertension, or PAH, a devastating and progressive disease in which deficient BMPR2 signaling causes pulmonary vascular remodeling, leading to right heart failure.

Focusing more closely on luspatercept. In April, our partner, Celgene, submitted the Biologics License Application, or BLA, to the FDA and the Marketing Authorization Application, or MAA, to the EMA. The joint teams are committed to the successful execution of all of the planned upcoming regulatory and commercial activities in an effort to get this new treatment option to patients as quickly as possible.

To put a potential approval in context, there are currently no medicines approved to treat MDS or beta-thalassemia-associated anemia in the United States. And it's important to recognize the true impact chronic anemia has on a person's life.

Due to the effects of anemia, patients are often limited in completing normal everyday activities, and they frequently experience significant fatigue and exhaustion along with dizziness and shortness of breath after completing these activities. Patients have likened the feeling to climbing up a long steep hill with a 50-pound weight on their backs. Anemia can also impact mental acuity. Due to limited treatment options, a majority of patients require frequent red blood cell transfusions to help manage their disease.

We believe that luspatercept could bring marked improvements to patients with these conditions by potentially decreasing transfusion burden. As I mentioned earlier, we also continue to explore luspatercept's potential in additional patient populations.

Similar to the MEDALIST and BELIEVE patient populations, there are no medicines approved for patients with treatment-naive, lower-risk MDS nontransfusion-dependent beta-thalassemia and myelofibrosis-associated anemias. We are looking forward to results from all 3 ongoing trials, beginning with the preliminary top line results from the myelofibrosis Phase II trial in the second half of this year.

Based on the high unmet medical need in all patient populations under evaluation across the luspatercept program, we and Celgene estimate that the annual global peak sales potential for luspatercept exceeds $2 billion for the MDS and beta-thalassemia indications alone.

We also estimate up to an additional $1 billion of global peak sales potential for the opportunity in myelofibrosis-associated anemia. With our low to mid-20% tiered royalty rate, these peak sales estimates have the potential to translate to significant royalty revenue for Acceleron.

I'd now like to move to our wholly owned candidates, beginning with our neuromuscular program.

Last month, at the Muscular Dystrophy Association or MDA Clinical & Scientific Conference, we highlighted previously presented results from Part 1 of the Phase II trial of ACE-083 in patients with FSHD. We expect top line results from Part 2 of the trial in the second half of 2019. Additionally, we'll be sharing previously presented results from Part 1 of the Phase II trials evaluating ACE-083 with CMT during a platform presentation at the American Academy of Neurology's 71st annual meeting tomorrow. Enrollment is ongoing in Part 2 of our CMT trial.

Turning to PAH. Enrollment is ongoing in PULSAR, our Phase II randomized, double-blind, placebo-controlled trial. At the same time, we are enrolling patients in SPECTRA, our Phase II exploratory, open-label, single-arm study. We look forward to presenting a preclinical abstract of sotatercept in PAH later this month at the American Thoracic Society, ATS, 2019 international conference.

With that I will turn the call over to Kevin McLaughlin, our CFO, to review the financials.

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

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

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

Thanks, Habib. Good afternoon, everyone. Our cash, cash equivalents and investments as of March 31, 2019, were $513.1 million. This compares to December 31, 2018, cash, cash equivalents and investments of $291.3 million. Based on our current operating plan and projections, we believe that current cash, cash equivalents and investments will be sufficient to fund projected operating requirements until such time as we expect to receive significant royalty revenue from luspatercept sales.

Collaboration revenue for the first quarter was $2.8 million. The revenue was 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 first quarter were $43.6 million. This includes R&D expenses of $32.8 million and G&A expenses of $10.8 million. The company posted a net loss for the first quarter ended March 31, 2019, of $38.1 million.

I will now turn the presentation back over to Habib for final remarks.

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

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

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

Thanks, Kevin. And with that, I will briefly summarize our priorities for the remainder of this year and beyond. Beginning with luspatercept in hematology. In addition to upcoming regulatory activities following the BLA and MAA submissions, we and Celgene are looking forward to submitting MEDALIST and BELIEVE Phase III trial results for publication this year.

We also anticipate preliminary top line results from the Phase II myelofibrosis trial in the second half of this year as well as top line results from the Phase II BEYOND trial in 2020, while the Phase III COMMANDS trial continues to enroll patients. We also continue to evaluate potential opportunities to expand luspatercept's development into additional diseases associated with anemia.

Looking at our neuromuscular program with ACE-083, we expect top line results from Part 2 of our Phase II FSHD trial in the second half of 2019 and top line results from Part 2 of our Phase II CMT trial in the first quarter of 2020.

Lastly, for PAH, we expect to provide top line results for PULSAR trial in the first half of 2020 and preliminary results from the SPECTRA exploratory trial in 2020.

I will now open the call to questions. Operator?

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

Questions and Answers

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

Operator [1]

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

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

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

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

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

Habib, I saw the open-label extension study for ACE-083. Got out of the clinicaltrials.gov, I guess, earlier today. I'm kind of interested in how that's going to play out as patients roll off Part 2 of the other Phase II studies. But I guess my specific question is, I believe the open-label extension is exploring every 4-week and every 8-week dosing. Is there any data specifically supporting that 8-week dosing? And I guess the larger question is, when you think about potentially moving into a Phase III study, how important is it to have a defined, a less frequent maintenance strategy in place? I've got a follow-up.

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

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

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

Okay. Carter, thanks for the question. Yes. So with respect to the extension study, just to remind everyone, Part 2 of both the CMT and FSHD studies are designed in a way to, once again, show safety and tolerability as well as total muscle volume as the primary endpoint. But most importantly, we're going to be looking at a number of secondary endpoints regarding function.

Now in anticipation of a successful study, what we would need to do then is to move forward and to understand if indeed, we have a positive study, how do we optimize ACE-083 for the patients. And based on the research that we've done to date, Carter, what we've learned is that the most important thing is for the drug to work, i.e. for it to build healthy muscle and for that to translate into a functional benefit. And we've defined that as a benefit of at least 10% or more across a number of endpoints. That's the most important answer that we need to get to with Part 2 of the study, and we look forward to seeing those results.

But what we've also heard is that if, indeed, we have a successful drug, it would be optimal to find opportunities to make it more convenient. And so what we're exploring in the extension study is 2 dosing regimens of q4 weeks and q8 weeks. And we're going to follow the patients, and we're going to see if, indeed, after the primary endpoint has been established, if indeed that we have durability of the drug. And so -- and that's really based on some of the data that we've seen when we look at Part 1 of the study. Again, we don't have any functional benefits in durability that we can look at, but we have been taking a good close look at total muscle volume from the 3 weeks after the last dose as well as 8 weeks after the last dose. And there is reasons to believe that we'd be prudent in exploring this in an extension study, and that's exactly what we're doing.

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

Carter Lewis Gould, UBS Investment Bank, Research Division - Large Cap Biotech Analyst [4]

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

Great. That's helpful. And I guess now that with 2494 having been discontinued, I guess it also begs this -- the question if ACE-083, unfortunately, would disappoint. What does that do around your commitment to neuromuscular and, I guess, your commitment to having sort of 3 legs to your -- to the stool around potential therapeutic areas you'd be pursuing?

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

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

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

Yes, yes. So again, thanks for the question. As you know, we recently announced the termination of the 2494 study. Again, that was our healthy volunteer study with our systemic agent. And unfortunately, we saw emergence of ADAs that were unexpected, and we ended up terminating the study.

Now the most important thing is we feel very confident that there isn't any readthrough into ACE-083, our locally acting agent that we just talked about. But your question is more of a strategic one that if, indeed, we are not successful with 83, what would be the future for our company as well as the therapeutic area within neuromuscular. What I can tell you right now, we're not pursuing a backup candidate for 2494 systemically. We are going to wait and see how 83 plays out. And based on the findings and the learnings that we get from 83, we'll reassess, but there is no commitment at this point that we are going to find a backup for the systemic agent of 2494. So let's wait and see.

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

Operator [6]

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

Our next question comes from Geoffrey Porges from SVB.

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

Andrew Scott Berens, SVB Leerink LLC, Research Division - MD of Targeted Oncology & Senior Research Analyst [7]

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

This is Andrew for Geoffrey. Two questions regarding the recently discontinued program.

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

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [8]

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

Sorry to interrupt, but it's really hard to hear you. Could you speak up?

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

Andrew Scott Berens, SVB Leerink LLC, Research Division - MD of Targeted Oncology & Senior Research Analyst [9]

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

Can hear me now?

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

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [10]

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

A little bit better. Yes.

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

Andrew Scott Berens, SVB Leerink LLC, Research Division - MD of Targeted Oncology & Senior Research Analyst [11]

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

Okay. So a few questions about the program 2494 as well. So we -- I mean, regarding the R&D expenses, should we expect the expenses are trending down this year due to the discontinuation of this program?

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

Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [12]

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

It's Todd. Yes. So as far as R&D expense goes, so 2494 Phase I healthy volunteer study, as far as the development expenses go across the entire portfolio, Phase I, pretty low. There will be some trailing expenses as the team continues to wind down the study and look at the data more closely over time. But as far as 2494 goes, off the books really soon. But as you can imagine, with the 2 larger Part 2 of both CMT and FSHD ongoing, the kickoff of the extension studies for both those disease areas, the PULSAR Phase II trial in PAH now having a lot of the patients on study and the kickoff of the SPECTRA study, this is a really important time for us across all the trials. So those expenses, even with 2494 coming off, will be going up this year.

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

Andrew Scott Berens, SVB Leerink LLC, Research Division - MD of Targeted Oncology & Senior Research Analyst [13]

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

Okay. That's helpful. Another question is about -- so what impact do you believe that the development of HIF inhibitors might have on the opportunity for luspatercept in MDS, particularly in frontline patients? What do you -- I mean, would you expect HIF inhibitor to work in ESA nonresponders as well?

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

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [14]

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

Yes. So this is Habib. Thanks for the questions. If I understand your question correctly, you're wondering if the HIFs are going to have a role and then whether or not they're going to be a competitor, either ESA or the luspatercept. So our understanding of the HIFs is that they could play a very significant role for patients who are suffering from low endogenous EPO levels based on their mechanism of action. Based on their inhibition of hepcidin, again, could potentially play a role in competing with ESAs, where -- luspatercept is really finding its niche, and we hope, if approved, will establish that niche is -- really in dealing with patients who actually aren't suffering from low endogenous EPO levels and really -- are really faced with anemia due to the fact that they have a late-stage maturation defect due to these various ligands within the TGF-beta superfamily that are inhibiting the appropriate healthy red blood cell formation in these patients. And that's really where we play a role. And so in terms of really the upfront setting, we are going head-to-head in a Phase III study, the COMMANDS study, which is going to be designed -- it is designed in a superiorly designed way to show efficacy against ESAs. And we're banking on our track record of predictability of our Phase IIs translated into success in the Phase IIIs. And again, if you look at what we were able to establish with the MEDALIST and the BELIEVE studies, which was really hinged on the information gathered from the PACE studies and the Phase II studies in beta-thalassemia. We were able to show the predictive nature, the success that we did -- we established in this patient population and replicated it in Phase III.

In the frontline setting, in terms of your question specifically, we were able in the COMMANDS-like patient population to show a 56% response rate. Now although that we're going to be looking at some different endpoints, so for example, we're going to be looking at patients who are going to be transfusion independent for 24 full weeks as the primary endpoint, we feel very confident that if successful, that we'll be able to position luspatercept as the frontline setting drug in that population.

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

Operator [15]

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

Our next question comes from Yaron Werber from Cowen.

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

Lisong Ai, Cowen and Company, LLC, Research Division - Research Analyst [16]

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

This is Leo in for Yaron. I just have 2 questions regarding the sotatercept in PAH. So what do you expect the Phase II PULSAR study to show? And can you remind us the powering of this study on the primary endpoint as well as the secondary endpoint?

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

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

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

Yes. Thanks for your question. So I'm going to pass the question on to our Chief Business Officer, Dr. John Quisel, who's been very involved in this project. John?

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

John D. Quisel, Acceleron Pharma Inc. - Executive VP, Chief Business Officer & Secretary [18]

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

Thanks, Habib. So on the PULSAR trial, the primary endpoint is pulmonary vascular resistance, PVR. And we're looking for a decrease of at least 20% in the PVR, which represents an improvement in function for the patient. And then we have an important secondary -- key secondary end point of the 6-minute walk, where we're looking for an improvement in -- of 30 meters. As to the powering, we have not disclosed the powering for the trial.

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

Operator [19]

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

Our next question comes from Danielle Brill from Piper Jaffray.

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

Nirav Y. Shelat, Piper Jaffray Companies, Research Division - Research Analyst [20]

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

This is Nirav Shelat on for Danielle Brill. I just had a couple quick questions. The first was: So from what we've been hearing, BMS likes luspatercept is most enthusiastic about it from Celgene's entire pipeline right now. So we were wondering if you've had any interactions with them about what their thoughts are on the commercial plans. If there's been a sort of shift in commercial strategy for this?

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

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

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

Yes. Thanks for the question. And I would have to say from our vantage point that we would concur with that sentiment.

From everything that we're seeing on the sidelines, all signals point that luspatercept is going to be a very important asset in their portfolio.

I can tell you right now that everything that we're seeing in terms of the project teams, the momentum that's associated with an important filing and hopefully approval and preparations for launch signal that all parties involved very much have their eye on the ball. And I can tell you, as the CEO of Acceleron, I couldn't be more pleased with all of the efforts behind -- all of the efforts on luspatercept. With respect to specific discussions. No, we have not had direct conversations with BMS. But at the appropriate time, we very much look forward to working closely with them to make sure that we continue on the already established positive momentum for luspatercept.

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

Nirav Y. Shelat, Piper Jaffray Companies, Research Division - Research Analyst [22]

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

Great. And the second question I had was just: Can you remind us on the EU approval process? When should we expect a decision to be made? And when would launch be?

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

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [23]

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

Yes. So again, we were pleased to share the submission of both the BLA in the U.S. as well as the MAA in Europe for April. Again, with the U.S., time lines, as you're probably already aware, under a standard review, that would take us into April of next year. But if we were fortunate enough to have a priority review, that would shave 3 or 4 months off of that time line. With respect to Europe, it's a little bit of a longer process. And our expectations are that if everything goes well, that we would be looking at a potential approval in Europe in the second half of 2020.

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

Operator [24]

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

Our next question comes from Geoff Meacham from Barclays.

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

Gregory Allen Harrison, Barclays Bank PLC, Research Division - Research Analyst [25]

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

This is Greg Harrison on for Geoff. So from a commercial standpoint, there is a clear patient pool of individuals with MDS and beta-thal. But there could still likely be some launch challenges given the lack of other treatments and the need to build the market. Can you discuss the pushes and pulls here? And what are your expectations? And as you approach the launch, what factors should we look at to gauge how well uptake is going?

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

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [26]

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

Right. So I'm going to ask our Chief Commercial Officer, Sujay Kango, to tackle at least some of the portions of that question. Obviously, we're not going to be able to answer all of that in the level of detail that I'm sure you'd want, at this point. But, Sujay, I think you can give some top line.

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

Sujay R. Kango, Acceleron Pharma Inc. - Senior VP & Chief Commercial Officer [27]

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

Sure. Thank you, Habib. So yes, I mean, from launch readiness and preparation, as you can imagine, we clearly have done a lot of inside gathering with peers, with physicians as well as the patient advocacy groups to understand where the true unmet needs are. As you sort of articulated right there is a large gap from the last approved therapy, which was about a decade ago to the current time lines, right? So there is a significant amount of a patient population and a need, particularly for those patients who are not eligible for ESAs and/or have failed and are transfusion-dependent, right? So this is the sweet spot for the patient population that there is a huge need for a new treatment. And if and when we are approved, we would be able to fill that gap and the unmet need for the patient population. So that's the pool that we see as the unmet need. Of course, in a launch, this is a new disease sort of therapeutic class of drugs and medicines. So we'll have to educate the market about the variations and the differences in relation to the therapy as it would be for any new molecule that comes into the market. So that's not unusual from that fact of the matter. So we anticipate we'll be able to do that quite rapidly with our partner, Celgene, who has a significant amount of experience in the field of hematology, right?

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

Operator [28]

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

Our next question comes from Jeff Hung from Morgan Stanley.

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

Ishmael Izakiel Gyimah Asante, Morgan Stanley, Research Division - Research Associate [29]

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

This is Ishmael on for Jeff. Two quick ones. Can you remind us of what we should expect from the MF data? And what you would consider to be clinically meaningful? I have a follow-up after that.

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

Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [30]

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

Sure. It's Todd. So we're currently in a ongoing Phase II myelofibrosis study. We're looking across multiple patient populations. Cohort one is at monotherapy luspatercept. Cohort -- patients are just anemia only, no transfusion burden. Cohort 2 is also luspatercept monotherapy, but the patients have a baseline transfusion burden of 2 to 4 units per 4 weeks. And then those same style patients in combination with ruxolitinib in Cohorts 3a and 3b. The primary endpoint, if the patient is anemia only, is 1.5-gram increase of hemoglobin over a 12-week period, sustained within the 24 weeks. And then for the transfusion-dependent patients, it's transfusion independence sustained for a consecutive 12-week period within the 24 weeks. So what we saw with our sister molecule, sotatercept, in an IST is a greater than 30% response rate in both monotherapy and combination therapy in those cohorts. What the -- clinically meaningful proportion of patients for the bar, we think a 25% to 30% response rate in any of the patient populations would be success. And so we'll have to look at what the data shows, and that would potentially put us in a place to do either a really broad Phase III trial or a very selective Phase III trial or even multiple Phase III trials across multiple patient populations. So we'll have to wait and see that data in the second half of the year.

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

Ishmael Izakiel Gyimah Asante, Morgan Stanley, Research Division - Research Associate [31]

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

Very helpful. And secondly, could you speak to the ACE-083 CMT data now expected in the first quarter of 2020 instead of this year? What have you learned about enrollment that might have resulted in the updated view?

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

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

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

Yes. So great question. So we had always said FSHD would be reading out in the second half and deliberately, knowing the time lines for CMT, pegged it for year-end. And so basically the learnings -- what we are finding is that the recruitment and, quite frankly, the screen failure rates were a little bit higher than we had expected. And we now have just moved the time line from year-end to the first quarter. So it's a change, but it's a slight change.

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

Operator [33]

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

Our next question comes from Kennen MacKay from RBC Capital Markets.

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

Kennen B. MacKay, RBC Capital Markets, LLC, Research Division - Co-Head of Biotechnology Research [34]

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

Wondering if maybe you could just help us understand as we think about the ACE-083 update coming in and sort of getting a look at muscle function and muscle strength here, if you could help us understand what's considered clinically meaningful in these settings? And then maybe just going back to some of your data, that was -- from this molecule, at the 2019 Muscular Dystrophy Association Conference. Wondering if that sort of data surrounding volume growth in these patients, the baseline patients with FSHD, if that volume growth sort of gives you increased confidence around the link between that muscle function? And really how we should be thinking about that translating?

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

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [35]

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

Sure. Kennen, it's Habib. Thanks for the question. So let me start with the second question first. So we, I think, have been pretty consistent, Kennen, in our confidence that ACE-083 through its mechanism of action through its sequestration beyond GDF-8, through the mechanism of being a direct intramuscular injection that we can, with confidence, grow healthy lean muscle. We've been able to demonstrate that repeatedly across different diseases. And what you saw most recently was a confirmation of that and showing, to my knowledge, unprecedented muscle growth in the double digits. The question remains though as to whether or not we'll be able to translate that into a functional benefit. And indeed, if we cannot do that, we do not have a drug.

Now what is clinically meaningful is the first part of your question. And what are we going to be looking for? And because of the fact that we powered the study again, the Part 2, to be able to again show us, in a statistically significant way, that we can grow healthy lean muscle, we also want to see on a number of factors: What is the sum of those functional benefits that we would look for? And how much do we need to see? And so for example, with the tibialis anterior muscle -- so again, just to remind everyone, in both diseases, FSHD and CMT, we're dosing patients who have foot drop who have weakness in the dominant muscle causing that foot drop, the tibialis anterior muscle. And so what we've done is we've looked at a number of functional parameters for foot drop and the associated disabilities with foot drop. So we're looking at 6-minute walk distance, we're looking at timed 10-meter walked/run, were looking at 4-stair climb, et cetera, et cetera. And so what we want to be able to see, in combination with those functional benefits, we also have what we call the FSHDHI, or the health index inventory that we've worked very closely with the University of Rochester, which is really going to be a validated PRO that we're going to be looking at in combination with these measurements as well as with the muscle increases that we hope to see. And if we can see benefits and trends in the double digits of 10% or more across a number of these parameters, then we feel that we'll have a clinically meaningful drug. And that will very much inform us on what we're going to do in Phase III.

Now as I spoke with Carter earlier from UBS, we're also running an extension study because what we also want to find out is not only that the drug work -- could the drug work, but could it work in a way that's conducive to patients getting injected every 3 weeks, every 4 weeks, or maybe even every 8 weeks. But what we have learned repeatedly is that the most important thing is not the muscle growth and it's not the dosing interval, it's can you show unambiguous functional benefit. And that's what we're trying to answer.

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

Kennen B. MacKay, RBC Capital Markets, LLC, Research Division - Co-Head of Biotechnology Research [36]

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

Got it, Habib. And maybe just going back to, again, some of that data that was at the Muscular Dystrophy Association meeting, I guess, thinking about sort of the -- I guess, it depends on the slope of those curves that tide -- the increase in muscle volume to the increase in muscle strength across those endpoints that you referred to, walk, the FSHD mobility and ambulation. I guess, with a double-digit improvement in muscle volume, should we be expecting a double-digit improvement in muscle strength as well or at least on those endpoints or...

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

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [37]

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

Yes. We cannot conclude that. We would hope that, that's the case. What we can say, Kennen, is if you look back at some of the previous studies with the systemic agents, when you were seeing increases systematically of 4%, 5%, 6%, there was functional improvements of 4%, 5%, 6%. Now is that enough for us to draw a direct correlation that if we see double-digit increases in muscle mass that, that will be in function? I hope so, but we cannot conclude that at this point.

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

Todd James, Acceleron Pharma Inc. - VP of IR & Corporate Communications [38]

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

And Kennen, specific to the MDA presentations, we did do some baseline correlations across some of the tests but really -- scientifically interesting, but nothing can really be taken away from that. No surprise there are correlations between having a good 6-minute walk test and having a good 10-meter walk/run at baseline, some correlations between the quality of muscle and your ability to do the 10-meter walk/run, but we're really close to the data at this point as far as patients on treatment and versus placebo. So let's see how that data reads out here for FSHD in the second half.

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

Operator [39]

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

I show no further questions in the queue. At this time, I'll like to turn the call over to Habib Dable, CEO, for closing remarks. Please go ahead.

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

Habib J. Dable, Acceleron Pharma Inc. - CEO, President & Director [40]

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

Yes. Great. Thank you, again. Just want to thank everybody for your continued interest in our company. The next 6 to 12 months are, obviously, going to be very important time at Acceleron as we prepare for the launch of luspatercept as well as the results from a number of our clinical trials and very much looking forward to meeting many of you at the upcoming conferences. So with that, wish everybody a great night.

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

Operator [41]

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

Thank you, ladies and gentlemen, for attending today's conference. This concludes the program. You may all disconnect. Good day.