Analyst Conference Summary

Biotechnology

conference date: August 4, 2016 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2016 (Q2, second quarter 2016)

Forward-looking statements

Overview: Most advanced product is now in Phase 3 trials.

Basic data (GAAP):

Revenue was $3.2 million, down sequentially from $18.2 million, and down from $5.7 million year-earlier. All revenue is from collaborations.

Net income was negative $22.0 million, down sequentially from $5.1 million, and down from negative $ million year-earlier.

Earnings per Share (EPS, diluted) were negative $0.59, down sequentially from $0.13, and down from negative $0.32 year-earlier.

Guidance:

Not given.

Conference Highlights:

"With luspatercept now in two Phase 3 clinical trials, ACE-083 heading toward its first Phase 2 clinical trial in the second half of 2016, a rapidly expanding and advancing pipeline of preclinical programs and capital to finance the Company into the second half of 2019, Acceleron is well-positioned for both near- and long-term growth," according to CEO John Knopf.

All GAAP revenue was from collaboration partners.

In Q2, Acceleron presented updated luspatercept data that builds upon the encouraging Phase 2 results. 51% of lower-risk MDS patients achieved increased hemoglobin levels. The extension study had 81% of patients with increased hemoglobin with 50% achieving transfusion independence. Updated beta-thalassemia results also showed hemoglobin increases.

Given the good data from the luspatercept Phase 2 trials for MDS (myelodysplastic syndromes) and beta-thalassemia, the Phase 2 trials have long-term extensions and cohort additions. Phase 3 trials, BELIEVE for beta-thalassemia (300 patients) and MEDALIST for MDS (210 patients) are continuing enrollment. Both indications received fast track designation from the FDA. Both are partnered with Celgene.

The initial results with ACE-083 were reinforced by showing impressive increases in muscle volume in the second muscle studied in the Phase 1 clinical trial, which was randomized and double-blind. The positive results were statistically significant. ACE-083 Phase 2 trial is scheduled for mid-2016 for FSHD muscular dystrophy.

ACE-2494 for muscle mass and strength clinical studies could begin in early 2017. This is the first molecule from the IntelliTrap platform.

Phase 2, part 2 trial of dalantercept with axitinib for renal cell carcinoma (DART) is enrolling with increased investigator interest due to the part 1 results. Data could be reported in 2016. Granted Fast Track Designation. Acceleron plans to collaborate on dalantercept to fund the Phase 3 program.

Celgene and Acceleron will shift sotatercept from dialysis setting to the pre-dialysis kidney disease setting. Design changes will be discussed with regulators in 2016. The number of pre-dialysis patients is much larger and the reimbursement environment is "preferred."

Celgene funds 100% of expenses in the partnered luspatercept programs, and royalties will be in the low to mid 20% range, if the programs are successful.

See also Acceleron pipeline.

Cash and equivalents ended at $263 million, down sequentially from $279 million. Liabilities included $11.4 million in warrants. Believes has sufficient cash to operate through 2019.

Acceleron believes its cash should be sufficient into the second half of 2019.

$16.1 million was spent on R&D and $6.7 million on general and administration. Loss from operations was $19.7 million. Other expense $2.4 million.

Acceleron's goal is to have FDA approvals in 5 indications by 2020, and at that time to have 8 candidates in clinical trials. Hopes to be cash flow positive in 2020.

Acceleron plans to introduce a new internally discovered compound into clinical trials every 12 to 18 months. There are currently 6 preclinical programs that could enter clinical trials, all targeting diseases with high unmet medical needs. Focus is on muscle diseases and fibrosis. IntelliTrap platform is being used to generate new potential candidates.

Q&A:

ESA naive luspatercept population? In Phase 2 cohort, distinct from Phase 3 enrollees. Includes anemia patents eligible for ESAs. First data by year end. They have to have reasonable levels of blood components other than hemoglobin.

Dalantercept strategic value given competition? Believes can add meaningful benefits to patients with advanced RCC. Also hoping for benefit from combination studies. But if Phase 2 results are positive we will seek a collaboration partner.

Any discussions with FDA about endpoints? They have been open to new CKD population endpoints. We will announce our plans later this year.

2494 clinical setting? Phase 1 will be healthy volunteers. We have not disclosed disease indications yet. We will provide more details around the time of the IND filing.

FSHD trial enrollment time estimate? No guidance yet, but could give an estimate before the Phase 2 study starts. It will be distinct from what others have studied, so will have a different enrollment rate.

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