Analyst Conference Summary

Biotechnology

conference date: March 1, 2017 @ 5:00 AM Pacific Time
for quarter ending: December 31, 2016 (Q4, fourth quarter)

Forward-looking statements

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

Basic data (GAAP):

Revenue was $3.4 million, up sequentially from $3.0 million, and down from $3.8 million year-earlier. All revenue is from collaborations.

Net income was negative $19.3 million, up sequentially from negative $20.8 million, and down from negative $27.1 million year-earlier.

Earnings per Share (EPS, diluted) were negative $0.51, up sequentially from negative$0.55, and up from negative $0.81 year-earlier.

Guidance:

Not given.

Conference Highlights:

Habib Dable, CEO of Acceleron said: "The pace of recruitment continues to accelerate in both of our ongoing Phase 3 luspatercept trials, and we are highly confident that Celgene will complete enrollment in the second half of 2017. Furthermore, we and Celgene plan to expand the program by initiating new Phase 2 trials in non-transfusion dependent beta-thalassemia and myelofibrosis patient populations highlighting our confidence in the blockbuster potential of luspatercept. With encouraging preliminary results and multiple ongoing studies across all of our programs, we are well positioned for a transformational year in 2017."

All GAAP revenue was from collaboration partners.

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.

Luspatercept Phase 3 trials continued enrollment: beta-thalassemia study and MDS (myelodysplastic syndromes). A phase 2 trial for first-line MDS patients also continued. Celgene believes this therapy has blockbuster potential.

Data from Phase 2 luspatercept trials presented at ASH in December were positive. New indications may be addressed in new trials in 2017.

ACE-083 Phase 2 study for facioscapulohumeral muscular dystrophy treated its first patient.

The dalantercept (+axitinib) Phase 2 study for advanced renal cell carcinoma continued.

Sotatercept development plans are up to Celgene (answered in Q&A)

ACE-2494 will begin its first Phase 1 trail in 2017. This would be the first IntelliTrap platform agent to go to trial.

See also Acceleron pipeline.

Cash and equivalents ended at $234.4 million, down sequentially from $251 million. Liabilities included $12.2 million in warrants. Believes has sufficient cash to operate through 2019.

$19.1 million was spent on R&D and $6.3 million on general and administration. Loss from operations was $22.0 million. Other income $2.7 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:

Luspatercept early study secondary benefits? Sotatercept did increase mineral bone density. Luspatercept was developed specifically to narrow effects, so no bone density changes intended. What they do have in common in beta-thalassemia is reduction in liver iron concentration. That has been demonstrated and continues to be monitored. We also are seeing changes in quality of life using a number of scales.

Luspatercept new studies, what level of efficacy would be required? With ESA competition we will be dealing with different price points. We will need to show some sort of superiority either in efficacy or safety. We have seen good responses in those populations so far, and should have more data later this year.

Would the new Phase 2 trials be registration enabling, or require Phase 3 trials? The lower-risk MDS plan is currently to initiate the trials, we will have more on regulatory strategy later this year.

Dalantercept trial enrollment is almost complete. Believe enough events will have occurred to present preliminary data in 2017. How it measures against competition has yet to be determined.

Sotatercept development plans? That is up to Celgene. We have had discussions about it potential applications.

Cash burn in 2017? We are funded through 2019, relatively equal distribution over that period of time. There is no pivot strategy once we have Dalantercept data, we still expect to seek a partner.

RS negative patient population? The prognosis for that population is poor. It looks like, at some low EPO level, below 200 or 500, might be a place where luspatercept will work.

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