June 29, 2018 | 7:26 PM by Fahad Khalid | fkhalid@jaguaranalytics.com

Unlock: Acceleron Pharma (XLRN) – Boom!

It pays to do fundamental research. This bullish view on Acceleron (XLRN) was presented in the 2Q2018 Quarterly Outlook on March 31. The stock price has gone from $39.10 to $48.50 (+24%) and our August 40 Calls returned 150%! To learn more about our approach and how you can become a successful trader, sign up for a 4-week trial and test drive the JaguarLive chat room with some of the best traders: SUBSCRIBE

March 31, 2018

Acceleron Pharma (XLRN)

Trade to Consider – Buy straight August 40 calls for $6.50 debit or less.

Acceleron is a Massachusetts-based clinical stage biopharmaceutical company developing therapies to regulate transforming growth factor-Beta (TGF-B) superfamily of proteins found in all tissues, particularly in bone, lung, kidney and placenta. These proteins perform multiple cellular functions, including cell growth rate control, generation, differentiation and ultimately, rate of cell death.

Research is focused across three areas that continue to present a high, yet unmet medical need with current trials undergoing in each field that to date all have seen success in early stages of development:
• Hematology
• Neuromuscular
• Pulmonary

Of all the therapies that Acceleron is developing, we will focus on two specific indications of one drug with upcoming trial data presentations targeted for mid-2018, and we’ll also briefly look at the remaining treatments in the pipeline.

Luspatercept

The main goals of Luspatercept treatments are to increase and maintain hemoglobin levels, and to reduce or eliminate red blood cell transfusions. The following studies intend to have results in mid-2018:
• MEDALIST Phase III trial in Myelodysplastic Syndrome (MDS)
• BELIEVE Phase III trial in Transfusion Dependant Beta-Thalassemia (TDBT)
Luspatercept is being developed in collaboration with Celgene (CELG).

MEDALIST

Myelodysplastic syndrome (MDS) affects people mainly over the age of 60 with 13,000 new cases each year in the U.S. alone with a higher prevalence in males. Depending on the stage of the disease, life expectancy can vary from 5 months to 6 years.

MDS is a type of cancer where the bone marrow does not make enough healthy blood cells, instead producing abnormal and immature ones that fail to work properly. While some instances of the disease develop from unknown causes, others are the result of exposure to toxic chemicals including chemotherapy, tobacco, pesticides and heavy metals such as lead. Most common treatments are cytotoxic chemotherapy using a mix of anti-cancer drugs to suit individuals’ criteria, radiation therapy or stem-cell transplants. Red blood cell transfusions augment treatments to decrease anemia, however this eventually leads to excess iron buildup.
To date, Luspatercept has shown meaningful clinical results in erythroid response (a type of red blood cell) in over 50% of patients and continues to provide long-term benefits in over three years of treatments.

Successful Phase II results from PACE trials presented at the 59th American Society of Hematology (ASH) conference in December 2017 demonstrated encouraging responses from participants. Lower-risk MDS patients treated long-term with Luspatercept showed robust and sustained increases in hemoglobin (protein that transports oxygen in the blood), decreases in transfusion burden and a high rate of red blood cell transfusion independence (RBC-TI), meaning lower requirements of transfusions, all of which were targeted goals in the study.

Of the 99 patients treated with therapeutic dose levels, 53% showed an increase of in hemoglobin levels or a reduction in RBC transfusion burden as outlined by the International Working Group, Hematologic Improvement – Erythropoietic (IWG-HI-E) criteria. 43% (29/67) that were receiving RBC transfusion at an established baseline of 2 or more units per 8 weeks responded positively and managed RBC-TI for 8 or more weeks.

Safety and tolerability studies on 106 patients showed the majority of adverse events being Grade 1 or 2; seven patients had Grade 3 non-serious adverse events while just three showed serious adverse events in the form of general physical health deterioration, weakness, and pain.

BELIEVE

Beta-Thalassemia (BT) is an inherited blood disorder that causes a reduction in hemoglobin due to the gene that controls the production of beta globin being defective. The condition is more common in people of Mediterranean, African, and Southeast Asian descent. Typically, symptoms appear in the first two years of life, causing, among other issues, life-threatening anemia, resulting in failure to thrive and in most cases organ enlargement and misshapen bones. Many patients require blood transfusions which over time lead to iron buildup affecting the liver and heart.

There are two types of Beta-Thalassemias, transfusion-dependant (TD-BT) and non-transfusion dependant (NTD-BT). BELIEVE trials are for TD-BT while another of Accelerons’s studies labeled BEYOND is for NTD-BT.

At the 22nd Congress of the European Hematology Association (EHA) held in June 2017, results from Phase II trials for Luspatercept in TD-BT showed to be safe and well-tolerated by patients at trial dose levels up to 1.25 mg/kg (drug/body weight) without any related serious adverse events. Quality of life improved on increased and sustained hemoglobin levels, similarly reduction of transfusion burden lowered liver iron concentration in patients that had previously shown elevated baseline.

Proof of concept data supporting the program has been strong to date with 41% of Phase II patients showing an average reduction of at least 33% in red blood cell unit transfusion requirement: this is important because once those afflicted by BT become transfusion-dependant, they rarely revert to non-dependant status. Additionally, those who require frequent transfusions are expected to derive greater clinical benefit in hemoglobin increase when compared with patients that exhibit milder levels of the disease.
As with the MEDALIST study, safety and tolerability showed most adverse events were Grade 1 or 2, with only 6 of 64 trail subjects reporting Grade 3 adverse events and none reporting any serious events.

Pipeline

Luspatercept – Acceleron will be initiating Phase III study for the COMMANDS trial in first-line lower risk MDS patients during 1H2018. As well, BEYOND Phase II trials were recently initiated for non-transfusion-dependant Beta-Thalassemia (NTD-BT) patients and have shown success in early testing.

A new indication is also being tested for Myelofibrosis (MF), a rare and serious form of bone cancer where blood-cell developing bone marrow cells develop and function abnormally, resulting in fibrous scar tissue leading to anemia, weakness, fatigue and enlargement of the liver and spleen. The disease does not have any obvious known risk factors. Trials have progressed to Phase II stage and data readout is expected sometime in 2019. Early trials have shown increased hemoglobin counts and this presents yet another potential market opportunity as current treatments are limited with only allogeneic hematopoietic cell transplantation (matched or unmatched donor stem cell transplant), however this procedure is reserved for higher-risk classification of the disease at it carries high transplant-related mortality rates.

Sotatercept – Sotatercept is Acceleron’s expansion into a new area, that of pulmonary diseases with this first indication targeting pulmonary arterial hypertension (PAH), a rare, progressive and life-threatening blood vessel disorder affecting arteries in the lungs and the right side of the heart.

Preclinical results on rats have returned promising data, showing mean pulmonary arterial pressure improvement and reduced muscularization relative to other therapies, including the approved Sidenafil (better known for its other indication and product name Viagra). Trials also have shown superior results to standard of care and encouraged by positive data, Acceleron anticipates starting Phase II trials in 1H2018.

Acceleron and Celgene are collaborating together on this therapy as well.

Neuromuscular Program

Acceleron’s muscular therapy pipeline consists of two products, ACE-083 and ACE-2494. Both assets are wholly-owned by the company.

ACE-083 addresses acute muscle weakness in two conditions, facioscapulohumeral muscular dystrophy (FSHD) and Charcot-Marie-Tooth (CMT) disease.

FSHD is a genetic muscle disorder in which the muscles of the face, shoulder blades and upper arms are among the most affected. It is a progressive condition that increasingly weakens and atrophies affected muscles, typical onset is prior to age 20 and is almost always associated with a genetic DNA mutation. Although the effects are not life-threatening, they are very debilitating and cause chronic fatigue in the vast majority of patients. The goal of ACE-083 is to increase strength and mass in specific muscles through local administration to improve function and quality of life.
In early January, Acceleron released their most recent update was on ACE-083 treatment for FSHD. Positive results were announced on Part 1 of Phase II trials where evaluations on lower leg muscle (tibialis anterior) showed a mean total muscle volume increase of 12.6% – this particular muscle is commonly afflicted in 70% of patients. Testing was also done on the biceps muscle which returned a mean total volume increase of 13.2%. Part 2 of Phase II will evaluate the therapy versus a placebo.

CMT is another genetic disorder affecting and causing muscle weakness, most commonly starting with the lower leg and progressing to the hands and impeding fine motor skills. The disease is often not fatal, it frequently results in patients needing foot/leg braces and orthopedic devices to help maintain mobility. There are approximately 100,000 patients in the US alone with the disease for which there aren’t any approved treatment options.

ACE-2494 is the second product in the muscular disorder field using a similar “Myostatin+” protein targeting approach as ACE-083. It differs in administration though, being a systemic agent which affects the entire body as opposed to targeting one part. Applications could cover a wider range of diseases, including Duchenne Muscular Dystrophy (DMD) and Spinal Muscular Atrophy (SMA), or could be used as an add-on to existing treatments. Preclinical trials have shown muscle mass increases in mice and studies have progressed to early Phase I stage.

Market Opportunity

Addressable market for Luspatercept’s indications in the US and EU alone is estimated to be roughly 115,000 patients, although most experts think that the population calculation for MDS segment, the largest of all, are conservative.

Credit Suisse models MDS sales of $2B in 2025, compared to the Street model which is expecting approximately $1.5B for 2025. RBC Capital models $1.4B for initial indications in MDS and BT, although the analyst sees a potential of up to $3B in 2030 peak global sales. Another $600M in sales could come from MF, and additional upside can potentially be derived from expansion therapies COMMAND and BEYOND.

Acceleron’s remaining pipeline products have to date not been included in price projection models, despite their early successes. 2018 and 2019 hold plenty of catalysts ahead and if these trials continue showing positive data, analysts will have to revise projections and price targets.

#CELG#XLRN
Sign up for a four-week trial!

Password must meet the following requirements: