Good afternoon, ladies and gentlemen, and welcome to the Acceleron Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference call is being recorded.

I would now like to hand the call over to Mr. Ed Joyce, Vice Director of Investor Relations at Acceleron. Please go ahead..

Thanks and welcome everyone to our second 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 & 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; and Todd James our Vice President of Investor Relations and Corporate Communications.

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..

Thank you, Ed. Good afternoon everyone and thank you for joining us today. This is one of the most exciting times in Acceleron's 16-year history, not only have we built one of the industry's most advanced TGF-beta superfamily based pipelines spanning multiple disease areas, but with U.S.

and EU regulatory filings under review for luspatercept, we're approaching the potential first approval of Acceleron discovered medicine. Our commercial team alongside our global cooperation partner Celgene is hard at work preparing for luspatercept potential approval.

Patient access for this first-in-class erythroid maturation agent remained a top priority. In parallel, we are thinking hard to Acceleron led two clinical programs in neuromuscular and pulmonary disease.

Our three ongoing placebo-controlled Phase 2 trials, two with ACE-083 and one with sotatercept has each completed patient enrollment and will help to establish proof-of-concept with top line results from all three Phase 3 trials expected in the next nine months.

As we can see, this is meaningful progress for all programs in 2019 and we are well positioned to achieve our near and medium term clinical and regulatory objectives. Turning to luspatercept, in June, we announced that both the U.S.

FDA and European Medicine Agency accepted the BLA and MAA filings respectively on this luspatercept for beta-thalassemia and myelodysplastic syndrome associated anemia. This is a huge achievement for the Acceleron and Celgene teams and represents another important step in delivering this novel therapy to patients.

With the filing acceptance, we are pleased with the FDA granted priority review for beta-thalassemia indication with the target action data December 4, 2019 and set a target action data for April 4, 2020 for MDS indication.

Likewise, the marketing authorization application for luspatercept and adult patient for MDS or beta-thalassemia associated anemia has been validated by the European Medicine Agency. With the potential decision on the filing expected in the second half of 2020, we look forward to working closely with the U.S.

and EU agencies to move this therapy toward approval. Patients are desperately in need of a viable treatment option and we believe that was luspatercept could bring a significant improvement to patients with these conditions by potentially eliminating or decreasing red blood transfusion burden.

Further luspatercept clinical development continued with three unbilling clinical trials, first line treatment in lower risk MDS patients, non-transfusion-dependent beta-thalasemmia, and myelofibrosis associated anemia.

To that end, we also remain committed to expanding our clinical development plan to additional patient populations with anemia that could potentially benefit from treatment with luspatercept. I would now like to move to our Acceleron led programs beginning with ACE-083 in neuromuscular disease.

We’re currently evaluating ACE-083 as a novel locally acting therapy with the potential to improve function in specific target muscles in two ongoing Phase 2 trials in patients with facioscapulohumeral muscular dystrophy or FSHD and Charcot-Marie-Tooth disease or CMT.

Results from Part 1 of the trials demonstrated substantial increases in muscle volume in target muscles. We previously announced full enrollment of Part 2 of the FSHD trial and recently completed full enrollment of Part 2 of CMT trial.

To quickly summarize beginning with FSHD, Part 2 of the trial is evaluating 56 patients with mild to moderate to tibialis anterior or bicep weakness, randomized to receive either ACE-083 or placebo.

Part 2 of the CMT trial is evaluating in 40 patients with mild to moderate to tibialis anterior weakness, randomized one-to-one to receive either ACE-083 or placebo. Specifically as outlined in this slide, the trial is designed to evaluate similar top line outcome measures post six months randomized treatment period.

These include the percent change in muscle volume and the changes in intramuscular fat fraction as well the percent change in motor functions. In the tibalis anterior cohort of the FSHD trial, these include the six-minute walk test, four stare climb, 10-meter walk run.

In addition to these outcome measures, we’re also evaluating the change in disease specific health-related quality of life as determined by patient reported outcomes in the FSHD help index and the CMT health index as well as overall safety and tolerability in both trials.

We believe that if the trial demonstrates improved functional outcomes, ACE-083 has the potential to become an important new therapy for patients with neuromuscular disease and unmet medical needs. We look forward to sharing top line results from both trials.

We anticipate FSHD results in the second half of 2019 and CMT results in the first quarter of 2020. I'd now like to move to our pulmonary program where we recently completed enrollment in the PULSAR Phase 2 trial of our lead pulmonary candidate sotatercept in pulmonary arterial hypertension or PAH.

We believe that PULSAR's rapid enrollment over the past 12 months, underscores the excitement for the program and the urgency for new therapeutic options for patients with PAH. Currently, the only approved PAH treatments target three main pathways that each promotes vasodilation of the pulmonary vessels to reduce pulmonary vascular resistance or PVR.

These therapies are used alone or in combination to improve exercise capacity and slow the progression of the disease. Sadly though, median survival for patients is only five to seven years.

We believe that the sotatercept has the ability to engage a fundamental pathway in the disease by rebalancing BMPR2 signaling and potentially restoring vascular homeostasis. In preclinical models for PAH, sotatercept reversed pulmonary vessel muscularization and improved indicators of right heart failure.

As outline on this slide, the PULSAR Phase 3 trial is a randomized, double blind placebo controlled study designed to evaluate the efficacy and safety of sotatercept in PAH patients. A total of 106 patients were randomized receive placebo, low-dose sotatercept or high dose Sotatercept in combination with a standard of care therapies.

Following the six month primary treatment period, participants in the trial will be eligible to continue in the 18 month extension period. The primary end point of the trial is the change from baseline and PVR and the key secondary end points is chain from baseline is six-minute walk distance.

We anticipate reporting top line results from PULSAR trial in the first quarter of 2020. Additionally, our clinical team is currently enrolling patients with PAH into the exploratory SPECTRA study. And with that, I'll turn the call over to Kevin McLaughlin, our CFO to review the financials..

Thanks, Habib. Good afternoon everyone. Our cash, cash equivalents and investments as of June 30, 2019 were $500.9 million. This cash balance includes the receipt of a $25 million gross milestone payments earned upon acceptance of the luspatercept BLA and MAA filings.

This compares 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 second quarter was $27.7 million.

The revenue is all from the Company's collaboration partnership with Celgene and is largely related to expenses incurred by the Company in support of luspatercept and includes the $25 million gross milestone payments.

The next potential milestone related to the luspatercept partnership is $35 million, due upon first approval from either the FDA or EMA. Total costs and expenses for the second quarter were $48.8 million. This includes R&D expenses of $34.8 million, and G&A expenses of $14 million.

The Company posted a net loss for the second quarter ended June 30, 2019 of $17.9 million. I will now turn the presentation back over Habib for final remarks..

Thanks Kevin. So to briefly summarize priorities for the remainder of this year and beyond, beginning with luspatercept in hematology. Our number one priority is the ongoing marketing application reviews with the FDA and EMA.

We are also focused on the execution of the ongoing clinical trials in additional patient populations, along with the potential expansion of luspatercept development in other diseases associated with anemia.

For ACE-083, we expect top line results from both Phase 2 trial in the next 9 months, starting with FSHD in the second half of 2019 followed both CMT trial in the first quarter. And finally, in PAH, we expect top line results from PULSAR Phase 2 trial in the first quarter of 2020 and preliminary results from the SPECTRA trial in 2020.

I will now open the call to questions.

Operator?.

Thank you, sir. [Operator Instructions] Our first question comes from the line of Carter Gould of UBS. Your line is now open..

Hi, guys. This is Andrew on for Carter. Thanks for taking our question. I had a couple.

So, first on the FSHD study, in order to de-risk the movements in Phase 3, how critical is that as you demonstrated efficacy across both tibialis and biceps patients? I guess that to put in other way, if you demonstrated efficacy in just one cohort, how would you think about the potential profile of that Phase 3 given the more mixed data on the other side? I had a follow-up on luspatercept, but if you can start there, that will be great..

Yes. So, thanks for your question. This is Habib.

It's an excellent question and I think was most important is as you mentioned, for us to be able to move forward in the Phase 3, there are a number of things that we are going to be looking at, both with the FSHD study as well as CMT the study, which will be reading out in the first quarter of next year.

Just to remind everybody, the primary end point of both studies is looking at the total muscle volume, and then obviously the path forward is really going to driven by our ability to reliably increase functional improvement in the patients that we're treating.

And so, whether its FSHD alone or CMT alone or the TAs or biceps, we will be looking at that data to ensure that we been able to achieve some minimum thresholds.

And some of those thresholds that we have talk about previously are looking at specific functional improvement such as in the tibialis anterior muscle, we are looking at six-minute walk, timed 10-minute walk run, four-stare climb. And again, we are looking for trends but we are also looking at some deviations from placebo in the double-digit.

And that's really what we've given ourselves as a threshold.

So, if you decide today as to whether or not we would go with by biceps alone or TA alone or FSHD alone, we're going to be looking at the data in totality and then after that and after having conversations with the regulators, we will get back to you in terms of our path forward for Phase 3..

And on luspatercept, seeing as you looking to co-promote in the U.S. at your own scheme -- I believe it was 15 or 20, how is Acceleron positioned its team here? In that where do you see Bristol and Celgene operating? And where can Acceleron layer on amplify the efforts here? Thank you..

Yes, that’s a great question and maybe I’ll pass it on to our, Chief Commercial Officer, Sujay Kango to elaborate on some of the details..

Sure, thanks for that question, and as we have articulated before right, first and foremost, the co-promote allows us to have a dedicated team. And as you articulated, we have about a 20 people field force that is there.

So, we solely focused on luspatercept and the approach we’re taking with Celgene side is actually to ensure that there is a surround sound. So we'll be operating with all with two centers as well as the top docile accounts to ensure that there’s coordination, collaboration, and we're going to maximize the opportunity, right.

So, we're not limited to a particular sort of cohort oppositions et cetera. What we’re going to do is, synergize and coordinate and amplify what is necessary to drive an optimal value proposition for luspatercept and satisfy customer needs..

Thank you. Our next question comes from Yaron Werber of Cowen. Your line is open..

Great, thanks for taking my question. So, Habi maybe I have a couple of questions, the first one maybe just a little housekeeping, but you’re mentioning now approval or EMA decision in the second half of ’20 for luspatercept. It was filed I believe in early April.

So, is it -- are you still sort of expecting a 12-month CHMP clock, and then 2 to 3 months EMA and maybe sort of goes into Q3? I'm just trying to understand, is it the thinking about the second half? And then I have a follow up as well..

Yes. So yes, Yaron, that is our expectation for the second half. And again, as you've alluded to when you were count for all of the clock stops, et cetera. That would take us into a second half potential decision.

And so beyond that, we haven’t elaborated which exactly which quarter that would fall into, but you’re right it does account for all the clock stop..

Okay has there been any request for EMA recently that we need to know about?.

No everything remains on track and is going as expected..

Okay. And then for the full PULSAR study, it’s a 106 patients, it's a randomized 3 to 3 to 4, and so overall, it’s going to be sort of 30, 40 patients in arm or so.

And so, I guess like my question really has to be with, do you think is powered for a statistically significant different? Or are you looking at trend at this point?.

Yes so, with respect to the primary end point, again primary end point is for PVR, and it is powered to show a difference, and we’re looking for difference for approximately 20% reduction in PVR..

Okay.

And is the primary end point that is in both doses? Or is it one of them, the high dose really powered against the placebo?.

Both..

It’s both okay terrific. Thank you..

Thank you. Our next question comes from Danielle Brill of Piper Jaffray. Your line is open..

Thanks again for the questions. A couple for me as well, I guess following up on the last question for the PULSAR study.

In addition to PVR, do you ultimately need to see an improvement on the six-minute walk distance to justify moving forward? Or will the PVR end point be enough to go into Phase 3?.

Yes, so, it’s a great question Danielle. So obviously, the primary end point of PVR is not going to be enough based on historical approvals that we've seen in this space. The gold standard has been and we believe will continue to be six-minute walk distance.

So, we're also looking at some secondary including six-minute walk distance, and we've given ourselves the thresholds there for that functional improvement of 30 meters. Now that said, we do believe that we potentially are approaching this disease area from a very unique perspective to the mechanism of action of rebalancing BMP signaling.

And as such, we could, if approved the one of the first disease modifying drugs approved in for these patients. And so, we could have an opportunity to be looking at some unique end points, as we think about Phase 3.

And as such, we move forward with the SPECTRA study and we're looking at some unique end points there, such as cardiac MRI, invasive cardiopulmonary exercise testing.

And so, as we think about Phase 3 once we flip the card on Phase 2, yes, indeed, we do want to see an improvement in six-minute walk, in addition to PVR, but we also could be looking at some creative end points as we think about Phase 3, as we get a better look at some patients as they start coming out of SPECTRA..

Okay.

So would a trend be enough there?.

Yes, so I think it's too early to say. Whence we look at the data, well, and we couple that again with what we're seeing in SPECTRA, I think we have a better read. That said, I think 30-meter increase is what we've been hearing from a number of our stakeholders, as a threshold that we'd like to achieve on top of standard of care..

Okay. And then one other related to luspatercept, you guys mentioned plans for next indications.

Can you just remind us, what some indications of interest might be and when we might get an update on that?.

Yes, so coming out of last summer, where we announced positive Phase 3 results for beta-thalassemia as well as lower risk MDS, not only were we thrilled that, the luspatercept was able to show that it can be restored healthy red blood cell formation in two very distinct diseases, but also it did so in a safe and tolerable way.

Now, just to remind everyone, we do have three ongoing studies today. We've got the BEYOND study, which is looking at non-transfusion-dependent beta-thalassemia. We've got the COMMANDS study, which is looking at the frontline settings head-to-head against ESA. We've also got the ongoing myelofibrosis study.

So, myelofibrosis is an addition to some of the recently where I guess at JPMorgan, we had announced that, if you looked at beta-thalassemia and myelodysplastic syndromes and all of the indications including the front-line settings and non-transfusion independence, we saw an opportunity of over $2 billion.

If indeed myelofibrosis at the next indications is successful, we believe that that could add an incremental 1 billion in peak sales opportunity. Now beyond that, we also feel that there is an opportunity to cast an even wider net.

And the teams, our teams and the Celgene teams are working and prioritizing some of those and they ask what else BEYOND myelofibrosis we could be looking at. We are looking at indications where we believe the unmet need is very high, but also where the mechanism of luspatercept could have a meaningful benefits to these patients.

And some of those indications could be alpha-thalassemia, chemo-induced anemia as some examples of areas where we believe the unmet need is high and where we potentially could have a path forward, so some more to come..

Thank you. Our next question comes from Eric Joseph from JP Morgan. Your line is now open..

Just a couple of questions from us, I guess first on FSHD with ACE-083. I guess from talking to doc, it seems that some of the feedbacks that we're getting from docs is that while presumably function in the TA and biceps is important other muscles, shoulders, hip, groin.

So, I guess I'm wondering, if more sort of fast forward to where ACE-083 potentially approved.

How, whether if kind of speak to, how -- what other the muscles groups you might anticipate the use of ACE-083 and whether other muscle groups might get back into the desirable Phase 3 trial?.

Okay. So Eric, you did cut out a bit, but I think what you're asking is based on some of the feedbacks you've been receiving from KOLs is that.

The TA and biceps are obviously important muscle that drives disability in the patient early on, but there are other muscles that the disease progress that may warrant perhaps some further studies around and perhaps an opportunity for lifecycle management.

Is that your question?.

Let's go..

Yes, okay. I think we may have lost, Eric, but I'm going to assume that, it's the question. So, I guess when we think about it, we were deliberate about the biceps and TA muscle as the early muscle group to be looking at for a number of reasons.

One, we have been able to identify these being the actual dominant muscle that actually affected the activity of daily livings for these patients in a very profound way.

Furthermore, we also know that specifically if you think about the tibialis anterior muscle in CMT for example, it's one of the earlier muscle that are affected with disease progression. And so, if indeed we are successful with FSHD or CMT or both.

We will obviously take a look at the lifecycle management opportunities, and if indeed, we feel to warrant that we can move into other dominant muscles where an intramuscular injection would have potential transformative effects of these patients' lives, then yes, we will consider it.

But for now, the focus is really on these two studies and Part 2 of Phase 2 to ensure that we have a reliable functional benefit for these patients as we consider moving into Phase 3 or not..

Great and one follow-up if I may hopefully, hopefully my line won't disconnect here. I guess other concern, PULSAR with trial fully approved.

Can you just comment on the rate of over open label portion?.

Hey Eric, it's Todd. Sorry, you're really breaking out. So, we've heard PULSAR and that recruited well, but then the rest was really hard to hear..

I'm interested in the rollover rates into the open label extension portion whether the patients continuing on their current dose or being converted to either the lower high dose and the frequency of follow up for PVR back here?.

Yes, it's Todd, Eric. Thanks for the question. Yes, we just finished enrollment and we’re not in a spot to be able to talk about percent rollover at this point, but when me get into the top line announcement for example, that’s something that we could talk about more as all the patients would have hit through the six months.

And so, that would be a better data point to get into to what that rollover rate would be..

Thank you. Our next question comes from Martin Auster of Credit Suisse. Your line is open..

Hi thanks for taking my questions, Habib and company. First one is to just kind of a follow-up and clarify some things from an earlier question. The SPECTRA trial I guess or the standard luspatercept trial is powered for the primary endpoint of PVR reduction.

Just want to clarify it’s not powered on the secondary endpoint for six minute walk? And then my second question had to do with you've obviously been in a really good position to be generating significant cash flows pretty quickly potentially from luspatercept.

Wanted to talk a little bit about kind of how you’re thinking about external BD discipline going forward, as there's cash flow coming in.

What is the sort of magnitude you think about and at what stage assets much of you looking to bring in the pipeline? Conversely, if you have a 100% success which is current kind of mid-stage pipeline so do you think you’ve got adequate resources and kind of cash that you can manage global pivotal registration programs for both assets or would you potentially seek geographic partnerships around those? Thanks..

Yes, so great, Marty. So, the first part of the question was really around powering, and yes, it's high powering for the primary endpoint for PVR. So, really the meat of the question is on the second part, and it’s around our current cash resources and our intent moving forward, both from our organic strategy as well as inorganic.

So again just to remind when we raised capital last time in January one of the things that I had articulated was for the very first time I would not be providing a cash run rate guidance as we have done each and every time prior to that.

And the reason for that is exactly as you're suggesting Marty is that we believe that based on the current burn rate and assuming that we’re able to conclude all of our Phase 2 trials as planned that our visibility took us to the point where we would have overlapping luspatercept royalties and received various milestones and therefore we never really saw that one year of cash if you will which will typically trigger a need for another raise.

Now that said, if indeed we flip the card on all of our Phase 2 programs and we feel that we have the opportunity to move forward and to Phase 3 from a position of strength, or if indeed there’s an inorganic opportunity to help us build out our leadership strategy in any one of the therapeutic areas that we’ve outlined as a commitment to moving forward, then that obviously would potentially change our posture, but again that would be on the heels of positive Phase 2 data.

And then looking at Phase 3 investments and that’s whether or not we felt it would be value generating and seeking an ideal partner or if indeed that we'd be better off to go it alone.

And so, we will be affecting all of those at the end of Phase 2, but right now as to where we sit, I think we sit in an excellent position where we're able to conclude our Phase 2 studies. And we're able to take a good look at them and then assess what is the best path forward..

I agree you're in an enviable position.

Do you have any sense that you can frame for investors in terms of as those royalties kind of start accruing and building up in terms of retaining profitability or maintaining profitability as a metric or how important that's going to be the selling going forward? Or is that going to be dependent on the poly opportunities in front of you in the pipeline?.

Yes, so I again, I think at the end of the day Marty, our goal is to do what we do best. And that is to innovate. And to focus on bringing transformative medicines to the patients that we're serving.

I think we're in an enviable position from a cash point of view and our ability to dictate our future moving forward in terms of how we would move into Phase 3 if we're successful. But I think we're also in a pretty enviable position that we are, we're in three therapeutic areas where we've got two positive Phase 3 results from hematology.

We've got three Phase 2s that are going on between pulmonary and neuromuscular. And we're in a wonderful situation here to be able to take all of those studies to their conclusion, and then assess it to whether or not what the best investment strategy will be.

That said, we will always be disciplined, and making sure that our primary focus, as we innovate is to do so in a way that we're continuing to also return value to our shareholders..

Thank you. Our next question comes from Geoffrey Porges of SVB Leerink..

Hi, how you doing? This is Neil filling in for Geoff. I just have one question regarding luspatercept and the upcoming launch. Can you explain how the responsibilities will be shared between you and Celgene-Bristol? And how do you intend to report expenses and revenues in the U.S. and EU? Thank you..

Yes, great. Thanks for the questions again, I'll pass that commercial question on to Sujay, and perhaps maybe even Kevin for a little detail if there's anything that we can provide on the reporting..

Sure. Thanks for that, Habib. And so sort of data guide, at this juncture, we are collaborating very closely with Celgene.

So our discussions with them in relation to the promotional aspect is we are developing a complete approach to a day one through 90 plan, we have worked together through a joint collaboration committee that needs frequently as well as the joint operating team that meets almost on a monthly basis, to really map out our launch plan our launch strategy of sort of approach to trainings or field team is now hired so they're undergoing training.

And so, all of those co-ordinations are taking place jointly with Celgene, and we will be prepared day one, ensuring that there's a sense of urgency to sort of really support the needs of the patients and the physicians. So that's our primary focus.

We both equally have a target to call on the beta-thalassemia physician population as well as the MDS physician population, once we have the approval, right. So at this juncture, there's no promotional elements that are going on, there's more training and preparation that's going on at this juncture. So we'll divvy up and sort of call.

Now, our territories are larger compared to the Celgene territories, so we actually coordinate at a local level to decide what's the optimal basis for us to really execute as well. And that's part of their account planning and territory planning that we are doing right now with our collaborators with Celgene..

Hi, Neil. This is Kevin. As far as the reporting goes, as a reminder, Celgene or BMS will be reimbursing us for a large, very large portion of our commercial appetite direct sales force et cetera. So, you will see in the P&L a reimbursement line up in collaboration revenue but the corresponding expenses down in the sales and marketing lines.

In addition, revenue obviously will be reported product related revenue for us, royalty related revenue will be reported and we'll have profits in place so that will be reported standalone on a quarterly basis based on the royalty and the achievement..

Thank you. Next question comes from the line of Yigal Nochomovitz of Citigroup. Your line is open..

Hi, Habib, and thanks for taking the question. I just wanted to dig in a little bit more on the biology of FSHD versus CMT and just in particular some of the differences in those two diseases that could lead to possibly differential muscle growth.

And more specifically, is there any reason to believe that either FSHD or CMT is more likely to yield a clinical benefit in the context of a similar muscle volume growth? Thanks..

Thanks for your question. I think I'll pass that on to John Quisel, our Chief Business Officer to elaborate a bit..

Sure. Thanks Habib. Thanks for your question. Certainly, one that we thought about a lot as we were setting up these trials, and essentially, these two disease we view as testing different hypotheses about patients where FSHD treatment provides the most benefit. So, I don't think we will take a bet on which one is more likely to work.

With FSHD, you have a disease where the pathology is really starting in the muscle with over-expression of the DUCs-4 transcription factor, leading to degradation of the muscle in that regard and the premise of ACE-083 is if we can strengthen and rebuild those muscle fibers it can restore function to the patients.

On the flip-side, there are a variety of disorders where patient experienced the death of the neurons and a loss of innervation of muscle fiber and consequently then we give prescription in that setting and that's the CMT trial intended to test.

So, there are patients who are having a slow and partial retraction of the neurons that innervate the muscle fibers.

And so, what you have is muscles at the limb and the TA muscle in particular at the bottom of the leg is affected where you have only a fraction of the muscle fibers are still innervated as a result, the non- innervated fibers lose strength, manifesting as foot drop for the patient.

And there the premise is that if you have a partial loss of strength in the muscle due to loss of innervation, if you can restore muscle mass and strength using something like ACE-083, then you should be able to restore the function.

So again, to summarize, two different premises differential disease with a muscle origin like FSHD being tested in that trial and disease with neurological origin like CMT being tested in that trial. And that we wouldn't handicap which one is more likely to work..

Okay, got it.

And then with respect to the different muscle end points, 6-minute walk to 10-minute walk, run the four stair climb, is there any reason to believe that one or more of those is more likely? Or do you have the higher confidence in one of those end points? Or is it just a matter of seeing the data before you can make any comments there?.

It really is going to be data-driven, we're, as we know, one of the few companies to run clinical trials in the space and really establishing the endpoints that are appropriate in the related readout with these patients and so we design the trials to measure a suite of different endpoints and we’ll be looking at the totality of the data..

Yes, the only thing I would add to that, Yigal, would be, we’re working very closely with University of Rochester in validating a PRO, it’s the FSHD health index as well as the CMT health index where we’re going to be looking at a number of questions, which affect patients activities of daily living, and we will be also assessing that questionnaire as we look at the Phase 2 data as well and looking to working with the regulators and validating that..

Okay that makes sense. And then just one question that wasn’t asked yet, maybe you expected this just like to get your thoughts MDS you received or you and Celgene received standard review in beta-thela's priority review. Was that what you expected? If so, okay, if not I'm curious what you have to say there? Thanks..

Yes, actually, I’ll repeat that what we expected.

We actually expecting that have been anticipating a standard review for both indications, but we always said that we would prepared whether it’s from all of our efforts from our commercial footprint, regulatory footprint, supply footprint to be able to execute on whether or not one or both got a priority review, and we were pleasantly surprised that we got a priority review for one of our indications, and we are prepared to execute..

Thank you. Our next question comes from the line of Leland Gershell of Oppenheimer. Your line is open..

Thanks for taking the questions and great progress.

First question on sotatercept with the PULSAR trial fully enrolled, want to ask if this time you can comment on the nature of the patients who came into the trial in terms of the level of severity of their PAH and essentially the other therapies they were on that they came in on into PULSAR?.

Hey, Leland, it’s Todd. Yes, so far as the patients that were included based off the inclusion criteria we’re looking, functional class 2 and 2 and so, we got what you’d expect from a normal split in a Phase 2 trial of this size.

And then as far as single, doublet or a triplet, that really comes down to which countries the patients got enrolled and what the standard of care is for that country. And so, we got that appropriate mix based off of how the trial enrolled per country..

Okay great, and then just quick couple of questions on luspatercept. I think you’ve mentioned the test you planning to fully publish the data for MEDALIST and BELIEVE.

Just wonder if you can comment on that publication strategy, if we might be seeing those coming up in peer review in the near future?.

Yes, so the goal is to submit both of the studies in 2019. And we’re still on track..

Great and then just last if I may, any comment you can provide on the or color you can provide on the community trial enrollment?.

No, further updates, we continue to be pleased obviously with that study. And once we get closer to full enrollment or absolute enrollment, we’ll be able to provide you a little bit more color in terms of the exact timelines you can expect for top line release, but nothing new to share Leland today..

Thank you. Our next question comes from the line of Paul Choi of Goldman Sachs. Your line is open..

Hi good afternoon everyone. And thanks for taking our questions, maybe pivoting back to 083 for a moment.

And with the Phase 2 trials wrapping up and the extension trial getting underway here, can you maybe comment on, what you're thinking with regard to, potential duration here over the longer term? And secondly, what you think as you proceed towards the Phase 3 stage? What the, what is the role of duration and sustainability of the change of muscle, the muscle change and the agencies there going forward?.

Yes, hey Paul, it's Habib again. So thanks for your question a very, very important question. And quite frankly, it's really the driver of our investments in the extension study. And when we think about duration, we can really think about it in two different ways.

One, what is the appropriate dosing into rollover patients will see a meaningful benefit, whilst at the same time minimizing office visits and/or injections. And two, the other part of duration is looking at how long will the drug last. And so, as you know, our primary end point in part two the study was at six months.

And we were dosing frequency of every three weeks. When patients roll over into the extension study, they'll be randomized either for every four weeks or every eight week dosing, and so we'll get a better read there on the appropriate dosing interval for patients to be able to maintain the effect.

And again, just to remind everyone, when we took a look back at part one data, and we look back at the extended dosing intervals, we had reason to believe that the efficacy was sustained up to potentially eight weeks, but I guess we'll see if indeed, that's going to materialize in part two, and more specifically, from a functional point of view.

With respect to how long the drug will last, again, that's one of the things that we're going to be looking at in the extension study as we follow patients out and so more to come, but at the same time, a very important question on both fronts..

Okay, great. Thanks for that, and maybe just on luspatercept and myelofibrosis.

I guess as you think about the Phase 2 data coming up here in the not-too-distant future, can you maybe think about where is the bigger opportunity to where you're more optimistic? Is it in the transfusion-dependent or non-transfusion-dependent population? And do you see, what as being potentially a quicker area for development and potential label expansion?.

Yes, so another good question, Paul. So again, when we recruited for the Phase 2 study, we looked at transfusion dependent and non-transfusion-dependent. But we also looked at patients who are on ruxolitinib because of enlarged spleen and those who are not on the ruxolitinib. So we also need to look at that dimension as well.

Quite frankly, if you think about it, and our focus in patients with the highest unmet need across all of the disease areas that we focus on, I would argue that the area that's probably most important would be those that are on ruxolitinib because again, to remind everyone, these myelofibrosis patients are suffering not only from an anemia due to a fibrotic bone marrow, but they're also suffering from drug-induced anemia due to just simple mechanism of action of Jak inhibition.

So if you think about it from that point of view, and that, our internal estimates here have over half of the patients, myelofibrosis patients who suffer from moderate to severe anemia that have been on, that are on ruxolitinib, arguably those patients that are on ruxolitinib and transfusion-dependent, would most likely be the largest opportunity for us to cater to an unmet need in this population.

And by the way, you haven't asked the question but maybe I'll give, state it anyways,.

Yes..

What we have given ourselves also an internal hurdle rate of about 25% to 30% efficacy in this particular group based on a lot of the research and feedback that we've been receiving. So, that's what we would hope to achieve, to give us the confidence to wanting to move forward..

Thank you. Our next question comes from Jeff Hung of Morgan Stanley. Your line is now open..

Thanks for taking the questions. For the MEDALIST patient population, you said that the earlier you can get the patients, the changes are better that they'll have bigger benefit from luspatercept.

So from a commercial standpoint, what kinds of education or other initiatives are you considering to encourage earlier treatment versus the 44 month median time since diagnosis for patients in MEDALIST?.

Yes.

So, I think the first thing to keep in mind as we think about our anticipated label for MEDALIST, to remind everyone, these are patients whose endogenous EPO levels are over 200 and therefore they would be ineligible for ESA or if indeed they were refractory to ESAs and approximately 95% of the patients in MEDALIST were refractory to ESAs and as you stated the median time duration from therapy, sorry, the median time to entering to trial from the diagnosis was about 44 months.

Now, one other things to keep in mind is that, a lot of patients in the study were on ESAs for 44 months because of the fact that there is nothing else really in terms of an alternative to be able to go on to such as Luspatercept.

And so, we're hoping that if indeed luspatercept is approved that if indeed a patient is refractory to an ESA that we may be able to get them earlier by the mere fact we got another approved drug on the market as an option for treatment.

But most importantly to get patients earlier, it will be really important for us to be successful in the COMMAND study, because COMMAND study is doing exactly that.

It's studying front line dosing of luspatercept head-to-head against ESAs and we're designing it and is superior to design fast and so, I would say by the mere fact of having a drug approved in that indication, I would hope that the time from diagnosis to getting on luspatercept will have shrunk just by the mere availability of another option for treaters and patients, and two, the COMMAND study in itself if successful will be able to get patients earlier..

Great, thanks and then housekeeping question.

Look like SG&A ramped up a little bit from from Q1 to Q2 relative to prior quarters, so given commercial preparations such as your own sales reps, how should we think about SG&A for the rest of the year?.

So, this is Kevin. Thanks for the question. Obviously, as I mentioned earlier, sales costs will go up as we just brought on our sales force but that will be reimbursed via Celgene or BMS. So, you will see an increase in the SG&A line by the corresponding increase in the collaboration revenue line.

Outside of that it's the normal growth of the G&A coming into the commercial environment and along with additional marketing efforts that support both local luspatercept program, but also our internally owned programs in sotatercept and in ACE-083..

Hey, Jeff, it's Todd here as you can imagine with four if you include FSHD, CMT now the extension studies the PULSAR Phase 2 trial with the 106 patients in SPECTRA expected trial this is the most internally led program we’ve ever had running at any given time so that’s where you’re seeing on the R&D side the increase quarter to quarter and we can expect that through the end of those trials..

Thank you. Our next question comes from Kennon MacKay of RBC Capital Markets. Your line is open..

Hey guys, this is Vikram on for Kennon.

I had a follow up on the 25% to 30% hurdle rate you just mentioned on myelofibrosis study if you could please elaborate on that and is that for both hemoglobin improvement and transfusion independence or how shall we be thinking about that?.

Hey it’s Todd yes it is multiple patient population as Habib was just describing that we’re going after in this trial we’re casting a pretty broad and wide net here and so really any patient population that if we meet that bar proportion patients that hits any of the endpoints that would be enough for us to potentially move forward with a Phase 3.

And so, that could be monotherapy luspatercept the non-transfusion dependent or the transfusion dependent or it could be in combination with rux likewise anemia only or transfusion dependent though we know over the course of this progression disease a majority of patients over time do become transfusion dependent..

Thank you.

At this time, I’d like to turn the call back over to Habib Dable for any closing remarks, sir?.

I just want to close the call by thanking everybody for joining us. I thank you for your continued interest in the Acceleron’s story and I very much look forward to meeting many of you over the course of the fall and winter as we close off the year and in the meantime wishing you all a great remainder of the summer. Thanks again..

Thank you sir and thank you ladies and gentlemen. This does conclude today’s conference. Thank you for your participation and have a wonderful day. You may disconnect your lines at this time..