Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Acceleron Pharma Inc (NASDAQ:XLRN)
Q2 2019 Earnings Call
Aug 5, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to the Acceleron Second Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

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

Ed Joyce -- Director of Investor Relations

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 our 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, Chief Business Officer; 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 like to now turn the call over to Habib Dable, our Chief Executive Officer.

Habib Dable -- President and Chief Executive Officer

Thank you, Ed, and 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 super family based pipelines spanning multiple disease areas, but with US and EU regulatory filings under review for luspatercept, we are approaching the potential first approval of an Acceleron discovered medicine. Our commercial team, alongside our global collaboration partner, Celgene, is hard at work preparing for luspatercept's potential approval. Patient access for this first-in-class erythroid maturation agent remains our top priority.

In parallel, we are advancing our two Acceleron-led clinical programs in neuromuscular and pulmonary disease. Our three ongoing placebo-controlled Phase 2 trials, two with ACE-083 and one with sotatercept, have each completed patient enrollment and will help to establish proof of concept with top line results from all three Phase 2 trials expected in the next nine months. As you 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 US FDA and European Medicines Agency accepted the BLA and MAA filings respectively of luspatercept for beta-thalassemia and myelodysplastic syndromes-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 beta-thalassemia indication with the target action date of December 4, 2019, and set a target action date of April 4, 2020 for the MDS indication. Likewise, the marketing authorization application for luspatercept in adult patients with MDS or beta-thalassemia-associated anemia has been validated by the European Medicines Agency, with a potential decision on the filing expected in the second half of 2020.

We look forward to working closely with the US and EU agencies to move this therapy toward approval. Patients are desperately in need of a viable treatment option and we believe that luspatercept could bring significant improvements to patients with these conditions by potentially eliminating or decreasing red blood cell transfusion burden.

For luspatercept, clinical development continues with three ongoing clinical trials: first line treatment in lower risk MDS patients, non-transfusion dependent beta-thalassemia 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 one of the trials demonstrated substantial increases in muscle volume in target muscles. We previously announced full enrollment of part two of the FSHD trial and recently completed full enrollment of part two of the CMT trial. To quickly summarize, beginning with FSHD, part two of the trial is evaluating 56 patients with mild to moderate tibialis anterior or bicep weakness, randomized to receive either ACE-083 or a placebo. Part two of the CMT trial is evaluating 40 patients with mild to moderate tibialis anterior weakness, randomized, one to one, to receive either ACE-083 or placebo.

Specifically, as outlined in this slide, the trials are designed to evaluate similar top line outcome measures post six month randomized treatment period. These include the percent change in muscle volume and the change in intramuscular fat fraction as well as the percent change in motor function tests. In the tibialis anterior cohort of the FSHD trial, these include the six minute walk test, four-stair climb, 10-meter walk/run.

In addition to these outcome measures, we are also evaluating the change in disease specific health related quality of life as determined by patient reported outcomes in the FSHD Health 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 promote 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 sotatercept has the ability to engage a fundamental pathway in the disease by rebalancing BMPR2 signaling and potentially restoring vascular homeostasis.

In preclinical models of PAH, sotatercept reversed pulmonary vessel muscularization and improved indicators of right heart failure. As outlined on this slide, the PULSAR Phase 2 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 to receive placebo, low dose sotatercept or high dose sotatercept in combination with the 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 endpoint of the trial is the change from baseline in PVR and the key secondary endpoint is change from baseline in 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.

Kevin McLaughlin -- Chief Financial Officer

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 payment earned upon acceptance of the luspatercept BLA and MAA filings. This compares to 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 payment. 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 to Habib for final remarks.

Habib Dable -- President and Chief Executive Officer

Thanks, Kevin.

So, to briefly summarize our priorities for the remainder of this year and beyond. Beginning with luspatercept and hematology, our number one priority is the ongoing marketing application reviews with the FDA and EMA. We're also focused on the execution of the ongoing clinical trials in additional patient populations along with the potential expansion of luspatercept's development in other diseases associated with anemia.

For ACE-083, we expect top line results from both Phase 2 trials in the next nine months, starting with FSHD in the second half of 2019, followed by the CMT trial in the first quarter. And finally, in PAH, we expect top line results from the 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?

Questions and Answers:

Operator

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

Andrew Berens -- UBS -- Analyst

Hi, guys. This is Andrew in for Carter. Thanks for taking our questions. I had a couple. So first on the FSHD study. In order to de-risk the move into Phase 3, how critical is it that you demonstrate efficacy across both the tibialis and bicep patients? I guess, that, to put another way, if you demonstrate efficacy in just one cohort, how would you think about the potential risk profile of that Phase 3, given the more mixed data on the other side? I had a follow-up on luspatercept, but you can start there that would be great.

Habib Dable -- President and Chief Executive Officer

Yeah. So, thanks for your question. This is Habib. So -- it's an excellent question, and I think what's most important is, as you mentioned, for us to be able to move forward into Phase 3. There are a number of things that we're going to be looking at, both with the FSHD study as well as the CMT study, which we'll be reading out in the first quarter of next year. Just to remind everybody, the primary endpoint of both studies is looking at total muscle volume and then obviously the path forward is really going to be driven by our ability to reliably increase functional improvement in the patients that we're treating. And so whether it's FSHD alone or CMT alone or the TAs or the biceps, we'll be looking at that data to ensure that we've been able to achieve some minimum thresholds. And some of those thresholds that we've talked about previously are looking at specific functional improvements such as in the tibialis anterior muscle, we're looking at six-minute walk distance, timed 10-meter walk/run, four-stair climb. And again, we're looking for trends, but we're also looking at some deviations from placebo in the double digits. And that's really why we've given ourselves as a threshold. So to decide today as to whether or not we would go with 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'll get back to you in terms of our path forward for Phase 3.

Andrew Berens -- UBS -- Analyst

Great. Thank you. And on luspatercept, I'm seeing as you're looking to co-promote in the US with your own team of -- I believe it was 15 to 20 -- how has Acceleron positioned its team here in that where do you see Bristol Celgene operating and where can Acceleron layer on or amplify the effort here? Thank you.

Habib Dable -- President and Chief Executive Officer

Yeah. So 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.

Sujay Kango -- Chief Commercial Officer

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 won't be solely focused on luspatercept. And the approach we are taking with Celgene is actually to ensure that there is a surround sound. So we will be operating with all the key centers as well as the top decile accounts to ensure that there is coordination, collaboration and we're going to maximize the opportunity, right, we're not limited to a particular sort of cohort of physicians, etc. 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.

Andrew Berens -- UBS -- Analyst

Great. Thanks, guys.

Habib Dable -- President and Chief Executive Officer

Thanks, Andrew.

Operator

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

Yaron Werber -- Cowen -- Analyst

Great. Thanks for taking my question. So, 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 2020 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 two to three months' EMA and maybe it sort of goes into Q3? I'm just trying to understand the thinking about the second half. And then I have a follow-up as well.

Habib Dable -- President and Chief Executive Officer

Yeah, so Yaron, so that is our expectation for the second half. And again, as you've alluded to, when you account for all of the clock stops, etc., that would take us into a second half potential decision. And so beyond that, we haven't elaborated exactly which quarter that would fall into. But you're right, it does account for all of the clock stops.

Yaron Werber -- Cowen -- Analyst

Okay. Has there been any requests from EMA recently that we need to know about?

Todd James -- Vice President, Investor Relations and Corporate Communications

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

Yaron Werber -- Cowen -- Analyst

Okay. And then for the PULSAR study, it's 106 patients, it's randomized three to four. And so, overall, it's going to be sort of 30, 40 patients an arm or so. And so, I guess my question really has to do with -- do you think that it's powered for a statistically significant difference? Or are you looking at trends at this point?

Habib Dable -- President and Chief Executive Officer

Yes. So with respect to the primary endpoint, again, the primary endpoint is for PVR, and it is powered to show a difference. And we're looking for a difference of approximately 20% reduction in PVR.

Yaron Werber -- Cowen -- Analyst

Okay. And is the primary endpoint is in both doses, right? Or is it one of them, the high dose really powered against the placebo?

Habib Dable -- President and Chief Executive Officer

Both.

Yaron Werber -- Cowen -- Analyst

It's both? Okay. Terrific. Thank you.

Habib Dable -- President and Chief Executive Officer

Thanks, Yaron.

Operator

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

Danielle Brill -- Piper Jaffray -- Analyst

Thanks. Hi, guys. 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 also need to see an improvement on the six-minute walk distance to justify moving forward? Or will the PVR endpoint be enough to go into Phase 3?

Habib Dable -- President and Chief Executive Officer

Yeah. So -- it's a great question, Danielle. So, obviously the primary endpoint 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 secondaries, including six-minute walk distance, and we've given ourselves a threshold 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 through the mechanism of action of rebalancing BMP signaling. And as such, we could, if approved, be one of the first disease modifying drugs approved for these patients. And if so, we could have an opportunity to be looking at some unique endpoints as we think about Phase 3. And as such, we move forward with the SPECTRA study, and we're looking at some unique endpoints 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 endpoints as we think about Phase 3 as we get a better look at some patients as they start coming out of SPECTRA.

Danielle Brill -- Piper Jaffray -- Analyst

Okay. So would it -- so would a trend be enough there?

Habib Dable -- President and Chief Executive Officer

Yeah, so -- I think it's too early to say. Once we look at the data and couple that again with what we're seeing in SPECTRA, I think we'll have a better read. That said, I think 30 -- a 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.

Danielle Brill -- Piper Jaffray -- Analyst

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?

Habib Dable -- President and Chief Executive Officer

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 luspatercept was able to show that it can restore healthy red blood cell formation in two very distinct diseases but also 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 ESAs. And we've also got the ongoing myelofibrosis study.

So, myelofibrosis is in addition to some of the -- recently, where -- I guess at the JPMorgan, we had announced that if we look at beta-thalassemia and myelodysplastic syndromes and all of the indications, including the frontline settings and non-transfusion dependent, we saw an opportunity of over $2 billion. If indeed myelofibrosis at the next indication 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 asking 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 benefit for 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.

Danielle Brill -- Piper Jaffray -- Analyst

Got it. Thanks so much, Habib.

Habib Dable -- President and Chief Executive Officer

Yeah. Thanks, Danielle.

Operator

Thank you. Our next question comes from Eric Joseph of JPMorgan. Your line is open.

Eric Joseph -- JPMorgan -- Analyst

[Technical Issues] my question. Can you hear me?

Habib Dable -- President and Chief Executive Officer

Yeah. Hey, Eric.

Eric Joseph -- JPMorgan -- Analyst

Hey. Just a couple of questions for us. I guess first on the FSHD with ACE-083. I guess from talking to docs, it seems that some of the feedback that we're getting docs is that while preserving function in the TA and the bicep is important, other [Technical Issues] So I guess I'm wondering if we were to sort of fast forward to where ACE-083 is potentially approved, how -- if you can kind of speak to how -- what other muscle groups you might anticipate to use ACE-083 and whether other muscle groups might get factored into the design of a Phase 3 trial?

Habib Dable -- President and Chief Executive Officer

Okay. So Eric, you did cut out a bit, but I think what you're asking is based on some of the feedback you've been receiving from KOLs is that the TA and the biceps are obviously important muscles that drive the disability in these patients early on. But there are other muscles as the disease progresses that may warrant perhaps some further studies around and perhaps an opportunity for life cycle management. Is that your question?

Yeah. Okay. I think we may have lost Eric, but I'm going to assume that is the question. So, I guess when we think about it, we were very deliberate about the biceps and the TA muscles as the early muscle groups to be looking at for a number of reasons. One, we've been able to identify these muscles as being the actual dominant muscle that actually affected the activities of daily living 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 muscles that are affected with disease progression.

And so, if indeed we are successful with FSHD or CMT or both, we'll obviously take a look at life cycle management opportunities. And if indeed we feel it's warranted that we could move into other dominant muscles where an interim muscular injection would have a potential transformative effect for these patients' lives, then, yes, we will consider it. But for now, the focus is really on in these two studies in part two of Phase 2 to ensure that we have a reliable functional benefit for these patients as we consider moving into Phase 3 or not.

Eric Joseph -- JPMorgan -- Analyst

Great. One follow-up, if I may. Hopefully, my line won't disconnect here. I guess as it concerns PULSAR which [Indecipherable] Can you just comment on the rate of [Technical Issues] portion? Hence...

Todd James -- Vice President, Investor Relations and Corporate Communications

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

Eric Joseph -- JPMorgan -- Analyst

I'm interested in rollover rates into the open label extension portion, whether patients are continuing on their current roster being converted to either the lower high dose and the frequency of follow-up for PVR. Thank you.

Todd James -- Vice President, Investor Relations and Corporate Communications

Yes. Hey, 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 we get into the top line announcement, for example, that's something that we could talk about more, as you know, all the patients would have hit through the six months and so that'll be a better data point to get into what that rollover rate would be.

Eric Joseph -- JPMorgan -- Analyst

Great. Sorry for the line, guys. Thanks for taking the question.

Habib Dable -- President and Chief Executive Officer

All right. Thanks, Eric.

Operator

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

Martin Auster -- Credit Suisse -- Analyst

Hey. Thanks for taking the question, Habib and company. First wanted to just kind of follow up and clarify something from an earlier question. The SPECTRA trial, I guess, or the sotatercept PAH trials powered for the primary endpoint of PVR reduction. Just wanted to clarify, it's not powered on the secondary endpoint for six-minute walk? And then my second question had to do with -- you obviously have been in a really good position to be generating significant cash flows pretty quickly potentially from luspatercept. Wanted to talk a little about kind of how you're thinking about external BD discipline going forward. There's those cash flow coming in. What is the sort of magnitude you think about and what stage assets might you be looking to bring into the pipeline? Conversely, if you have 100% success with your current kind of mid-stage pipeline, do you think you've got adequate resources and kind of cash flow that you can manage global pivotal registration programs for both assets? Or would you potentially seek geographic partnerships around those. Thanks.

Habib Dable -- President and Chief Executive Officer

Yeah. So -- great, Marty. So the first the first part of the question was really around powering. And yes, it was high powering for the primary endpoint of 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 forwards, both from our organic strategy as well as inorganic.

So, again, just to remind everyone, when we raised capital last time in January, one of the things that I had articulated was that for the very first time, I would not be providing a cash runway 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 receipt of various milestones, and therefore, we never really saw that one year of cash if you want, which would 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 into Phase 3 from a position of strength, or if indeed there is 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 forwards, 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 as to 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 assessing 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.

Martin Auster -- Credit Suisse -- Analyst

I agree. You're in an enviable position. Do you have any loose sense that you can frame for investors in terms of, as those royalties kind of start accruing and building up in terms of attaining profitability or maintaining profitability as a metric for how important that's going to be [Indecipherable] going forward? Or is that going to be dependent upon the opportunities in front of you and the pipeline? Thanks.

Habib Dable -- President and Chief Executive Officer

Yeah. So, 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 the ability to dictate our future moving forwards 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 in 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 as to whether or not what the best investment strategy will be. That said, we will always be disciplined and make 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.

Martin Auster -- Credit Suisse -- Analyst

All right. Thank you for the color. Appreciate it.

Habib Dable -- President and Chief Executive Officer

Thanks, Marty.

Operator

Thank you. Our next question comes from Geoffrey Porges of SVB Leerink. Your line is open.

Neil P. -- SVB Leerink -- Analyst

Hi, how are you doing? This is Neil filling in for Geoff. I just had 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 US and EU? Thank you.

Habib Dable -- President and Chief Executive Officer

Yeah, 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.

Sujay Kango -- Chief Commercial Officer

Sure. Thanks for that, Habib. And so, as you sort of stated right, at this juncture, we're 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 meets frequently as well as the joint operating team that meets almost on a monthly basis to really map out a launch plan or launch strategy sort of approach to training. So our field team is now hired, so they're undergoing training. And so all of those coordinations are taking place jointly with Celgene. And we will be prepared day one, ensuring that there is 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 like 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 will 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 the launch. And that's part of the account planning and territory planning that we are doing right now with our collaborators, with Celgene.

Kevin McLaughlin -- Chief Financial Officer

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 efforts, the direct sales force, etc. 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 a process in place where that will be reported standard on a quarterly basis based upon the royalty and the achievement.

Neil P. -- SVB Leerink -- Analyst

Great. Thanks for the clarification. Appreciate it.

Operator

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

Yigal Nochomovitz -- Citigroup -- Analyst

Hi, Habib and team, 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.

Habib Dable -- President and Chief Executive Officer

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

John Quisel -- Chief Business Officer

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 diseases we view as testing different hypotheses about patients [Indecipherable] treatment may provide the most benefit. So I don't think we'll 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 overexpression of the DUX4 transcription factor, leading to degradation of the muscle. In that regard, the premise of ACE-083 is that if we can strengthen and rebuild those muscle fibers, we can restore function to the patients. On the flip side, there are a variety of disorders where patients experience the death of the neurons and a loss of innervation of muscle fiber, and consequently then weakness that sets in in that setting. And that's what the CMT trial is intended to test.

So there patients 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. And as a result, the non-innervated fibers lose strength, manifesting as foot drop for the patients. 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, essentially diseases with a muscle origin like FSHD being tested in that trial and diseases with a neurological origin like CMT being tested in that trial, and we wouldn't handicap which one is more likely to work.

Yigal Nochomovitz -- Citigroup -- Analyst

Okay. Got it. And then with respect to the different muscle endpoints, six-minute walk, 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 a higher confidence in one those endpoints? Or is it just a matter of the seeing the data before you can make any kind of comments there?

John Quisel -- Chief Business Officer

It really is going to be data driven. We're, as you know, one of the few companies to run clinical trials in this space and are really establishing the endpoints that are appropriate and that are likely to read out with these patients. And so we've designed the trials to measure a suite of different endpoints, and we'll be looking at the totality of the data.

Habib Dable -- President and Chief Executive Officer

Yeah. The only thing I would add to that, Yigal, would be we're also working very closely with the University of Rochester in validating a PRO -- 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 a patient's activities of daily living. And we'll 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.

Yigal Nochomovitz -- Citigroup -- Analyst

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

Habib Dable -- President and Chief Executive Officer

Yes. Actually, I'll repeat what we expected. We actually expected and had been anticipating a standard review for both indications. But we always said that we would be prepared, whether it's from all of our efforts from a 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.

Yigal Nochomovitz -- Citigroup -- Analyst

Got it. All right. Thank you.

Operator

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

Leland Gershell -- Oppenheimer -- Analyst

Thanks for taking the questions. And great progress. First question on sotatercept. With the PULSAR trial fully enrolled, wanted to ask if at 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 potentially the other therapies they were on that they came in on into PULSAR.

Todd James -- Vice President, Investor Relations and Corporate Communications

Hey, Leland, it's Todd. Yeah. So as far as the patients that were included based off the inclusion criteria we're looking at, functional class 2 and 3 and so we got what you would expect from a normal split in a Phase 2 trial of this size. And then as far as single, doublet or triplet that really comes down to which country is the patient got enrolled in and what the standard of care is for that country, and so we got that appropriate mix based on how the trial enrolled per country.

Leland Gershell -- Oppenheimer -- Analyst

Okay, great. And then just a couple questions on luspatercept. I think you'd in the mentioned the past a plan to fully publish the data from MEDALIST and BELIEVE. Just wonder if you could comment on that publication strategy, if we might be seeing those coming out in peer review in the near future.

Todd James -- Vice President, Investor Relations and Corporate Communications

Yes. So the goal is to submit both of those -- both studies in 2019. And we're still on track.

Leland Gershell -- Oppenheimer -- Analyst

Great. And then just last, if I may. Any comments you can provide on the -- or color you can provide on the COMMANDS trial enrollment?

Habib Dable -- President and Chief Executive Officer

No. No further updates. We continue to be pleased, obviously, with that study, and once we get closer to full enrollment or at full 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.

Leland Gershell -- Oppenheimer -- Analyst

Okay, great. Thanks so much, Habib, and good luck.

Habib Dable -- President and Chief Executive Officer

Yeah. Thanks for your questions.

Operator

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

Paul Choi -- Goldman Sachs -- Analyst

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 under way 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 toward the Phase 3 stage? What the -- what is the role of duration and sustainability of the change of muscle -- the muscle change and the agency's view there going forward?

Habib Dable -- President and Chief Executive Officer

Yeah. 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 interval where patients will see a meaningful benefit, while 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 endpoint in part two of the study was at six months and -- with a 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 reasons 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.

Paul Choi -- Goldman Sachs -- Analyst

Okay, great. Thanks for that. And maybe just on luspatercept in 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's the bigger opportunity, where are you more optimistic? Is it in the transfusion dependent or non-transfusion dependent population? And do you see one as being potentially a quicker area for development and potential label expansion?

Habib Dable -- President and Chief Executive Officer

Yeah. So another good question, Paul. So again, when we recruited for the Phase 2 study, we looked at transfusion dependent and non-transfusion independent, but we also looked at patients who were on ruxolitinib because of an enlarged spleen and those who were not on ruxolitinib. So we also need to look at that dimension as well. Quite frankly, if you think about it and focus on patients with the highest unmet needs 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 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, 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 just state it anyways.

Paul Choi -- Goldman Sachs -- Analyst

Yeah.

Habib Dable -- President and Chief Executive Officer

Well, we've 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.

Paul Choi -- Goldman Sachs -- Analyst

Great. Thanks for that and congrats on all progress.

Habib Dable -- President and Chief Executive Officer

Yeah. Thanks for your questions, Paul.

Operator

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

Jeff Hung -- Morgan Stanley -- Analyst

Thanks for taking the questions. For the MEDALIST patient population, you said that the earlier you can get the patients, the chances are better that they'll have a 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?

Habib Dable -- President and Chief Executive Officer

Yeah. So, I think the first thing to keep in mind is when you think about our anticipated label for MEDALIST, to remind everyone, these are patients whose endogenous EPO levels are over 200 and therefore they would have been ineligible for ESAs, or if indeed they were refractory to ESAs. And 90 -- 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 entry into the trial from diagnosis was about 44 months.

Now, one of the 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, then we may be able to get them earlier by the mere fact that we've got another approved drug on the market as an option for treaters. But most importantly, to get patients earlier, it will be really important for us to be successful in the COMMANDS study because the COMMANDS study is doing exactly that. It's studying frontline dosing of luspatercept head to head against ESAs and we're designing it in a superior design fashion.

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 COMMANDS study in itself, if successful, will be able to get patients earlier.

Jeff Hung -- Morgan Stanley -- Analyst

Great. Thanks. And then a housekeeping question. Looks like SG&A ramped up a little bit from Q1 to Q2 relative to prior quarters. So, given commercial prepare operations such as your own sales reps, how should we think about SG&A for the rest of the year?

Kevin McLaughlin -- Chief Financial Officer

So, this is Kevin. Thanks for the question. Obviously, as I mentioned earlier, our sales costs will go up as we have now just brought on our sales force. But that will be reimbursed via Celgene or BMS. So you'll see an increase in the SG&A line, but a corresponding increase in the collaboration revenue line. Outside of that, It's normal growth of G&A coming into a commercial environment and along with additional marketing efforts that support both the luspatercept program, but also our internal -- internally owned programs in sotatercept and in ACE-083.

Todd James -- Vice President, Investor Relations and Corporate Communications

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

Jeff Hung -- Morgan Stanley -- Analyst

Okay. Great. Thanks.

Habib Dable -- President and Chief Executive Officer

Great. Thanks for your questions.

Operator

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

Bikram Singh -- RBC Capital Markets -- Analyst

Hey, guys, this is Bikram on for Kennen. 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 independents? Or how shall we be thinking about it?

Todd James -- Vice President, Investor Relations and Corporate Communications

Yeah. Hey, it's Todd. Yes, there's multiple patient populations as Habib was describing that we're going after in this trial. We're casting a pretty broad and wide net here. And so really any in any patient population, if we meet that bar of proportionate patients that hit 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 combination with rux, so likewise, anemia only or transfusion-dependent, though we know over the course of this progressive disease, a majority of patients over time do become transfusion-dependent.

Bikram Singh -- RBC Capital Markets -- Analyst

Thanks for the color.

Habib Dable -- President and Chief Executive Officer

Thank you.

Operator

Thank you. At this time, I'd like to turn the call back over to Habib Dable for any closing remarks. Sir?

Habib Dable -- President and Chief Executive Officer

I just want to close the call by thanking everybody for joining us. I thank you for your continued interest in the Acceleron 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.

Operator

[Operator Closing Remarks]

Duration: 53 minutes

Call participants:

Ed Joyce -- Director of Investor Relations

Habib Dable -- President and Chief Executive Officer

Kevin McLaughlin -- Chief Financial Officer

Sujay Kango -- Chief Commercial Officer

Todd James -- Vice President, Investor Relations and Corporate Communications

John Quisel -- Chief Business Officer

Andrew Berens -- UBS -- Analyst

Yaron Werber -- Cowen -- Analyst

Danielle Brill -- Piper Jaffray -- Analyst

Eric Joseph -- JPMorgan -- Analyst

Martin Auster -- Credit Suisse -- Analyst

Neil P. -- SVB Leerink -- Analyst

Yigal Nochomovitz -- Citigroup -- Analyst

Leland Gershell -- Oppenheimer -- Analyst

Paul Choi -- Goldman Sachs -- Analyst

Jeff Hung -- Morgan Stanley -- Analyst

Bikram Singh -- RBC Capital Markets -- Analyst

More XLRN analysis

All earnings call transcripts

AlphaStreet Logo