Analyst Conference Summary

Biotechnology

conference date: August 6, 2020 @ 2:00 PM Pacific Time
for quarter ending: June 30, 2020 (Q2, second quarter)

Forward-looking statements

Overview: Launching of Reblozyl off to a good start.

Basic data (GAAP):

Revenue was $39.8 million, up sequentially from $4.3 million, and up from $27.7 million year-earlier.

Net income was negative $18.5 million, up sequentially from negative $50.9 million, and down from negative $17.9 million year-earlier.

Earnings per Share (EPS, diluted) were negative $0.34, up sequentially from negative $0.95, and flat from negative $0.34 year-earlier.

Guidance:

none

Conference Highlights:

Habib Dable, CEO of Acceleron said: "Acceleron had another productive quarter marked by additional regulatory approvals of Reblozyl in the U.S. and E.U., strong product uptake resulting in subsequent royalty revenues, and multiple important updates for our lead program in pulmonary disease. Alongside our global collaboration partner, Bristol Myers Squibb, the U.S. commercial launch of Reblozyl is off to a great start in only its second full quarter since we received our first approval late last year. We also continue to make progress in evaluating additional patient populations in which this erythroid maturation agent could potentially reduce or eliminate red blood cell transfusion burden in patients with anemia-related blood disorders." Encouraged by early U.S. launch metrics for Reblozyl. Could be for sale in some EU nations soon.

All revenue was from collaboration partner Bristol Myers Squibb (BMY), mainly from cost-sharing and milestone payments.

Reblozyl (luspatercept) royalties from BMY will be in the low to mid 20% range. Believes sales in the first two indications could reach $2 billion annually, resulting in about $400 million per year in royalties.

Reblozyl royalty revenue in Q2 was $11.1 million, up sequentially from $1.5 million. Also a $25 million milestone payment from BMY. Based on BMY sales of $55 million [WM: but I think BMY reported $63 million]. $3.7 million was cost share revenue.

Reblozyl (Luspatercept) received approval for MDS in April 2020. Had received for beta-thalassemia late in Q4 2019. The EU decision is expected in the second half of 2020. In late April 2020 the CHMP issued a positive opinion for both b-t and MDS anemias. Also approved in the EU. A phase 3 trial for myelofibrosis patients who are being treated with JAK inhibitor will start in 2020. Bristol Myers Squibb expects to initiate the Phase 3 INDEPENDENCE trial in patients with MF on concomitant JAK 2 inhibitor therapy who require RBC transfusions by year-end 2020. Enrollment is ongoing in the COMMANDS Phase 3 trial in patients with treatment-naive, lower-risk MDS, with topline results expected in 2022.

In Q4 2020 Acceleron signed a collaboration and license agreement with Fulcrum Therapeutics to identify small molecules to modulate specific pathways associated with a targeted pulmonary disease indication.

In June, Acceleron presented positive topline results of the PULSAR Phase 2 trial of sotatercept in patients with PAH during the American Thoracic Society (ATS) 2020 Virtual Conference. Enrollment is ongoing in the SPECTRA trial in patients with PAH, with preliminary results expected in 2020. In April 2020 the FDA gave in Breakthrough Therapy designation and the EMA gave it Priority Medicines designation. Acceleron has full rights. Acceleron is preparing for a Phase 3 trial.

See also Acceleron pipeline.

Cash and equivalents ended at $390 million, down sequentially from $415 million. In July 2020, closed a follow-on public offering of common stock, for net proceeds of $492.5 million. No debt. Believes has sufficient cash to operate into 2021.

$38 million was spent on R&D and $20 million on general and administration. Total op ex was $59 million. Loss from operations was $19 million. Other income $0.5 million.

Q&A Summary:

Reblozyl bolus on launch? We benefitted from high physician awareness. There was a lot of pent-up demand. But new account growth and repeat orders for patients are encouraging. It was launched in a virtual environment, which created challenges and opportunities. There is a blood supply shortage. It is too early to draw conclusions about long term demand. We do have the permanent J code, which could help.

MDS v. beta-thal breakdown? Mostly MDS, uptake happened after it was approved.

Patient enrollment STELLAR? More details in the fall, but believe will recruit patients relatively quickly.

Sotatercept update timeline? There will be more data in the first half of 2021. In the open-label extension we are following both safety and efficacy, and are following placebo patients who crossed over.

SPECTRA was delayed by pandemic, so will share data early next year rather than late this year.

We are looking at other possible hypertension indications for sotatercept.

PULSAR/STELLAR/SPECTRA? PULSAR stands on its own. SPECTRA is an exploratory study, which could help with design of further studies. STELLAR is the first program, we are good with it.

The main effect of the J code is that reimbursement is faster, and may be at a different level, which is particularly important for some smaller practices.

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