Acceleron Pharma inc (XLRN) Q2 2021 Earnings Call Transcript

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Acceleron Pharma inc (XLRN)
Q2 2021 Earnings Call
Aug 5, 2021, 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 2021 Earnings Conference Call.

[Operator Instructions] As a reminder, this conference call is being recorded. I would now like to hand the conference over to Ms. Jamie Bernard, Associate Director of Investor Relations at Acceleron. Please go ahead.

Jamie Bernard -- Associate Director of Investor Relations

Thanks. And welcome, everyone, to our second quarter 2021 earnings call. The press release reporting our financial results, in addition to the presentation for today's webcast, are available on the Investors and Media page of our corporate website at www.acceleronpharma.com.

Joining me on the call this afternoon are Habib Dable, our Chief Executive Officer; Kevin McLaughlin, our Chief Financial Officer; Dr. Jay Backstrom, our Head of Research and Development; Sujay Kango, our Chief Commercial Officer; and Todd James, our Senior Vice President of Corporate Affairs and Investor Relations. As a reminder, we will be making forward-looking statements regarding our financial outlook in addition to regulatory, product development, and commercialization 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 10-K on file with the SEC.

In addition, today's discussion will include references to several non-GAAP financial measures, which are adjusted to exclude certain items. Reconciliations of these non-GAAP financial measures to the most comparable GAAP measures are available in today's press release on our website and at the appendix of today's presentation.

With that, I would now like to turn the call over to Habib Dable, our Chief Executive Officer.

Habib Dable -- President and Chief Executive Officer

Thank you, Jamie. Good afternoon, and thank you all for joining us today. One of the main highlights of the quarter was outlining our long-term vision and strategy at Research and Development Day in June. With everything that we have accomplished over the last few years, I was thrilled to highlight our future growth prospects as we build a global organization. We gave a step toward accomplishing this goal when we established an international headquarters in Zug, Switzerland earlier this year.

As has been our plan, royalty revenues from the sales of REBLOZYL are providing a solid financial footing, allowing us to execute on our vision of building a rare pulmonary disease franchise. Anchored by sotatercept in pulmonary hypertension and bolstered by ACE-1334 in systemic sclerosis-associated interstitial lung disease, we aspire to a leadership position built on these two potentially paradigm-changing therapies.

In addition to supporting our clinical development plans in rare pulmonary disease, our balance sheet should enable us to capitalize upon potential early or clinical stage business development opportunities in the rare pulmonary space. Even as our research team continues to explore the TGF-beta superfamily in rare pulmonary and other potential disease areas of interest to Acceleron. I would now like to spend a moment reviewing our plans to develop sotatercept more broadly across distinct population of patients with pulmonary hypertension, or PH. Beginning with WHO Group one pulmonary arterial hypertension, or PAH, in which we expect to establish sotatercept as a backbone therapy for patients at multiple stages of disease. PAH represents a significant market opportunity with an estimated 70,000 patients affected in the United States and Europe.

We are evaluating sotatercept in a range of PAH patient populations through our STELLAR, HYPERION and ZENITH Phase III clinical trials. We also believe there is a unique opportunity to develop sotatercept in Group two PH with left heart disease, specifically in patients with preserved ejection fraction who have combined pre- and post-capillary PH. Later this year, we plan to initiate the CADENCE trial, a Phase II proof-of-concept study in this patient population. Notably, we believe the CADENCE trial has the potential to be registrational.

According to our latest estimate, more than 50,000 patients in the U.S. and Europe are affected by this form of PH, adding substantially to sotatercept's future prospects. Lastly, we are also conducting preclinical evaluations for sotatercept in Group three PH, which is PH with interstitial lung disease. This group would further expand the potential market opportunity for sotatercept in PAH by more than 40,000 patients in the U.S. and Europe. When committing to a new disease area, Acceleron takes an exceptionally methodical approach.

Our research teams apply our understanding of underlying disease biology to translate these insights into approvable medicine. We develop animal models that recapitulate disease space of interest and to establish scientific rationale for entering the clinic and to guide dosing used in early clinical trials. Early success is followed by well-designed proof-of-concept Phase II studies that, when positive, inform the design of confirmatory Phase III trial. This fundamental approach led to the approval of REBLOZYL, a first-in-class erythroid maturation agent in both MDS and beta thalassemia and has allowed us to move rapidly from scientific rationale to a full Phase III program for sotatercept in PAH. As Jay outlined at R&D Day, we are applying the same methodology to move into Group two PH, which I highlighted on the previous slide, and to advance ACE-1334 into SSc-ILD. Importantly, Group two PH share a certain key similarities with PAH with regard to TGF-beta superfamily signaling and associated disease pathology.

In preclinical studies, sotatercept was shown to reverse the vascular and right and left heart remodeling that are the hallmarks of PH. Improvements in diastolic function, pulmonary hypertension and right ventricular function were also observed and notably at PH effective doses. In SSc-ILD, aberrant TGF-beta superfamily signaling levels are associated with several key manifestations of the disease throughout the body. Specifically, TGF-beta one levels are typically elevated in the lung, skin, heart and kidney. In preclinical studies, ACE-1334 was shown to significantly reduce hallmark fibrosis, leading to an improvement in lung function.

As a reminder, fibrotic interstitial lung disease is the leading cause of death among patients with systemic sclerosis. We estimate SSc-ILD has an addressable population of approximately 50,000 patients in the U.S. and Europe, creating a considerable opportunity for Acceleron to have an even greater impact in rare pulmonary disease with the portfolio of two assets in the space.

As I mentioned earlier, we have a unique opportunity to build a rare pulmonary disease franchise on top of the strong financial foundation from the future royalties of REBLOZYL, positioning us for continued and sustained growth. To put this in perspective, with our low to mid-20s tiered royalty rate and [DMS] covering nearly 100% of the program costs, our estimated annual nonrisk-adjusted sales of more than $4 billion in 2029 would translate into more than $800 million in royalty revenues for Acceleron.

Moving now to the ongoing REBLOZYL launch. Bristol-Myers Squibb reported approximately $128 million in net sales of REBLOZYL in the United States and certain countries in Europe in the second quarter, resulting in $25.6 million in royalties for Acceleron. This compares with sales of approximately $112 million in the first quarter and royalties to Acceleron of $22.4 million. We are pleased with product uptake in the first half of the year as we continue to make progress in working through the initial bolus patient group from earlier in the launch and transition to underlying new patient demand. Our joint commercial teams are focused on driving further growth this year and beyond by expanding the brand's reach to appropriate patients earlier in their MDS journey as well as educating physicians on proper REBLOZYL dosing to maximize patient benefit and increased duration of treatment. Now while we did experience some relief from the COVID impact within the marketplace during the second quarter, we have, in the past few weeks, seen an increase in center restrictions in several areas that are facing an increase in COVID cases and related hospitalizations attributed to the spread of the Delta variant. We are monitoring the situation closely for its effects on patients and our ability to access certain treatment centers. Additionally, we are seeing a strong ex U.S. market uptake and we anticipate launches in new markets over the course of 2021 as they receive reimbursement.

Equally exciting, we returned to the American Thoracic Society or ATS International Conference this year with new data on sotatercept from the open-label extension of the PULSAR Phase II trial and from the SPECTRA Phase II trial. Beginning with the PULSAR trial presentation highlights, patients on stable background PAH-specific therapies in the open-label extension period of the trial experienced consistent or improved responses in multiple efficacy end points, including six-minute walk distance, functional class improvement and reduction in NT-proBNP when treated with sotatercept for up to 48 weeks. Additionally, patients rerandomized to receive sotatercept on top of background therapies during weeks 24 to 48 after receiving placebo plus stable background therapy during the first 24 weeks of the trial, experienced clinical improvements consistent with those seen in the initial placebo-controlled treatment period.

Turning to SPECTRA Phase II trial. We reported interim results assessing the effect of sotatercept on a number of key measures. As measured by invasive cardiopulmonary exercise test at baseline and at week 24, investigators recorded improvements in the primary end point of peak oxygen uptake as well as in the range of secondary end points, including ventilatory efficacy, total workload and arteriovenous oxygen content. In addition, six-minute walk distance increased by an average of 72.4 meters from baseline to week 24 in nine patients for whom data were available. Sotatercept was generally well tolerated in both studies with adverse events generally consistent with previously presented data. We look forward to providing longer-term updates from both studies in 2022. As we evaluate the many ways to expand our pulmonary pipeline, we and our global collaboration partner, Bristol-Myers Squibb, continue to advance the development of REBLOZYL, also known as luspatercept, into additional patient populations affected by anemia. In June, at the European Hematology Association 2021 Virtual Congress, we reported results from the BEYOND Phase II study evaluating luspatercept plus best supportive care in adult patients with nontransfusion-dependent beta-thalassemia.

According to the results, which were presented during the presidential symposium of the top six abstracts at the Congress, 77.7% of patients treated with luspatercept achieved the primary end point of an increase of at least one gram per deciliter in hemoglobin from baseline during weeks 13 to 24 compared to 0% of patients in the placebo arm achieving the primary end point. Changes in patient-reported outcomes also correlated with the increases in hemoglobin. From a safety perspective, luspatercept was generally well tolerated.

And with that, I would like to hand the call over to Kevin McLaughlin, our Chief Financial Officer, to review the financials, and then we'll be available to take your questions. Kevin?

Kevin McLaughlin -- Chief Financial Officer

Thanks, Habib. Good afternoon, everyone. I'd like to refer you to our press release issued earlier today for a summary of our financial results for the second quarter 2021 and take this opportunity to briefly review a few items. We ended the second quarter with approximately $712.5 million in cash, cash equivalents and investments. Revenue for the second quarter of 2021 was $27.9 million, which includes $2.3 million of cost share revenue and $25.6 million of royalty revenue from net sales of REBLOZYL. All revenue was derived from the company's partnership with Bristol Myles Squibb. On a GAAP basis, total costs and expenses for the second quarter of 2021 were $91.6 million. Non-GAAP total costs and expenses were $77.1 million. On a GAAP basis, the company's net loss for the second quarter of 2021 was $63.5 million. Non-GAAP adjusted net loss for the second quarter was $49 million.

With that, I'd like to open the call to questions. Operator?

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Yaron Werber from Cowen. Your line is open.

Yaron Werber -- Cowen -- Analyst

Great, thanks for taking my questions. So maybe, Habib, for you or for the team. In terms of the run rate that we should think from here onwards for REBLOZYL, how fast can we expect new territories in the EU to come in? And do you have a sense kind of which ones are going to come in first? And also, as you think about inflection in the U.S. Is it resolution of COVID? Or is it ultimately going to be really the COMMANDS study that's really going to inflect the sales up? Thank you.

Habib Dable -- President and Chief Executive Officer

Okay. Thanks for your question, Yaron. So with respect to the ex U.S. question first, right now, I'd say the ex U.S. launch has really mimicked the U.S. launch in terms of the trajectory as well as the mix of patients. And we've been really, really pleased with the ex U.S. launch so far. And that has really been following that very similar positive trajectory that we saw early in the U.S. The majority of the sales, I would say, to date, have been coming from countries such as Germany, Austria. We've gotten some sales, obviously, from places like Greece. I think the big countries coming up that you also heard from our partners earlier was countries like France, Netherlands, Italy will be coming onboard. And I really think that over the course of the second half of the year, you're going to see more and more uptake. And that uptake really serves really two big purposes.

One, obviously, is the geographic expansion; but secondly, it really is a tremendous boost to the second indication of transfusion-dependent beta-thalassemia, where, as you know, the majority of the patients that we serve are coming from the U.S. market. So it is really [a minister] of two purposes in terms of the growth trajectory ex U.S. both, as I said, from geographic expansion as well as the disease penetration. Now with respect to the inflection point, it's really multifaceted, right? I think previously, what we've said is that the second half of this year, more specifically coming out of the second -- the summer months, we're really looking forward to a significant boost to sales, and early signs in terms of that trajectory are very promising. And that's really driven by a number of factors, Yaron.

One is really the fact that the mix of patients that we talked about traditionally in terms of the bolus converting into -- the bolus of heavily treated patients that are further down their treatment journey that are heavily transfused and really that mix, which we reported at the end of last year, around 40%, in the first quarter, we said that it was around 20% to 25%, now we can say that it's just under 20%, is really converting into the patient population that we've been targeting. And it's that new patient population that's earlier in the treatment journey that would obviously have a much better response to REBLOZYL based on our Phase III study, that would have a much better persistency, etc., etc..

So that's the first thing I would say that is going to help us in serving the inflection point. You talked about COVID. Obviously, COVID is a really important factor, but it's also a bit more of an unknown as you well know, as we were really gaining some significant momentum in terms of some of these key centers opening up, not only for our ability to have reps having face-to-face interactions in a promotionally sensitive launch, but it also gives the opportunity for more patients to be able to get more frequent access to their treaters, where we had reported earlier that we saw that there was about a 20% decrease in MDS patient visits from pre COVID level.

So with the Delta variant now starting to create a little bit more havoc and seeing some of those centers now actually returning to being closed to access from -- for some of our opportunities, that's a little bit more of an unknown. But we really are feeling and benefiting from some very positive trajectory coming into the second half in that world that are very, very optimistic about -- and then you talked about life cycle management, such as COMMANDS. That obviously has a life of its own in terms of a second, third leg for the opportunity for long-term growth for the brand. But as you know, that study is not going to be reading out until the end of next year or early into '23, and so that really serves as a really great foundation for our confidence that's never been stronger for reaching that $4 billion-plus peak sales if indeed our life cycle management opportunities proved to be successful.

Yaron Werber -- Cowen -- Analyst

Great. Thank you, Habib.

Habib Dable -- President and Chief Executive Officer

Yes. Thank you for your question. Yaron.

Operator

Our next question comes from the line of Carter Gould of Barclays. Your line is open.

Carter Gould -- Barclays -- Analyst

Great. Thank you, Habib. Thank you so much for taking my question. Both of mine relate to some of the severe blood shortages we're seeing here in the U.S. and to the extent that either creating opportunities or just sort of complicating the life of these centers. So I guess the first one is on the commercial side. And then secondly, just as we think about COMMANDS, how those shortages -- how you sort of maintain the fidelity of that study in an environment where there may be some issues in transfusions if need be.

Habib Dable -- President and Chief Executive Officer

Yes. Thanks for your question, Carter. And I'm going to pass the question on COMMANDS to Dr. Jay Backstrom, our Head of R&D. But in terms of just maybe the immediate impact in terms of the commercial impact that you're talking about in terms of the blood shortages, it's really, unfortunately, a double-edged sword, Carter.

So on one side, you could argue that with obviously less opportunities for blood supply having an impact potentially on regular transfusion, then you would argue opportunities for a therapeutic like REBLOZYL to come in and to really help lessen that burden that would be very welcome. And you could argue that, that would be some tailwind in terms of our launch trajectory. But on the flip side, whenever you're in these constrained situations, what you'll find is that people will find that their willingness to deal with lower hemoglobin levels and sometimes without the necessity for transfusion just due to the fact that they're trying to do everything they can to ration and is indeed they were having these shortages.

Then you would argue that the limit to getting transfused, which as you know, our label requires patients to be obviously being regularly transfused and then obviously refractory to ESAs, you would find that, that could potentially be more of a headwind in terms of getting people and new patients that would qualify. And so I would say, at this point, it's really hard to say or to quantify what that would mean. But based on the launch trajectory and what we're seeing right now, we're really very, very pleased with the uptake in this environment.

With respect to COMMANDS specifically, I'm going to pass that over to Jay in terms of what potential impact that could have on that study.

Jay T. Backstrom -- Head of Research and Development

Carter, this is Jay. So from the conduct of the clinical study to get into the trial, there's an assessment of transfusion requirements that patients need to have over a period of time, and each patient's threshold for that transfusion is documented, right? So I think to the extent that you're concerned about interfering with the way the trial is conducted, each patient refers his own baseline. Thresholds for transfusion are known. And so on trial, those thresholds will be assessed as patients are, going forward, deciding whether or not they really did require an RBC transfusion. So I think with the way the studies are conducted, there should be a significant impact on interpreting the data.

Carter Gould -- Barclays -- Analyst

Thank you.

Jay T. Backstrom -- Head of Research and Development

Thanks, Carter.

Operator

Our next question comes from the line of Danielle Brill of Raymond James. Your line is open.

Alex Nackenoff -- Raymond James -- Analyst

This is Alex on for Danielle. Thank you so much for taking my question. I'm just curious about the next steps for submitting the sNDA for REBLOZYL in the nontransfusion-dependent [thal] after the BEYOND readout? And how important is the quality of life PRO data in that review?

Habib Dable -- President and Chief Executive Officer

Yes. Thanks, Alex. I'm going to ask Dr. Backstrom to take that.

Jay T. Backstrom -- Head of Research and Development

Yes. So as we're working with BMS, there was an intent to kind of go ahead and advance the application potentially for after discussion with health authorities. So that's in flight. And with respect to quality of life, I think at the end, when you take a look critically at the data, the quality of life can influence the decisions. There is -- at the end of the day, it's ultimately going to be the clinical benefit that's within that application. I think as you saw the measures for a cohort of patients, quality of life did track favorably, and there was also elements in that application for where patients did not require transfusion. So I think it's the total package that goes into regulatory review. It is aided by having a prior approval and the setting of transfusion dependence certainly does contribute to the overall benefit risk consideration. But I think the totality of the data within the package will be considered.

Alex Nackenoff -- Raymond James -- Analyst

Great, thank you so much.

Operator

Our next question comes from the line of Geoff Porges from SVB. Your line is open.

Anna Baran -- SVB -- Analyst

This is Anna Baran on for Geoff Porges. Thank you so much for taking my question. First, a question on expenses. What is driving the quarter-over-quarter increase in SG&A? And is this quarter's SG&A representative of a run rate that we can expect for the second half of the year? And then second, a question on REBLOZYL. What we expect the timing for the readout in the myelofibrosis trial? And in terms of the opportunity there is myelofibrosis a comparable indication in size to MBS or closer to beta-thal?

Habib Dable -- President and Chief Executive Officer

Yes. Thanks, Anna. So I'll obviously allow our Chief Financial Officer, Kevin, to answer the question on SG&A. But when you talk about run rate, I think what you need to keep in the mind here is that as we continue to build our business on multiple fronts, whether it's through geographic expansion, whether it's building the infrastructure to be running multiple Phase III studies simultaneously, we are only growing and investing more as we continue to successfully innovate.

And so this increase in predicting run rates, even though we're not giving any specific guidance, you can only expect that our investments are going to continue to grow. But for more specifics, I'll give it to Kevin. And then with respect to the second question on myelofibrosis and how big that potential opportunity could be and how big a commercial opportunity that could be, I'll hand that over to Sujay, our Chief Commercial Officer.

Kevin McLaughlin -- Chief Financial Officer

Thanks, Habib. This is Kevin. Thanks for the question. Certainly, as Habib just reflected, as we grow and as we continue to advance the company into later-stage trials, we continue to add expenses in a variety of areas, including, obviously, the clinical area but also in the G&A area. I think one thing that's important to remember, and that's why we have started to break this out on our financial statements or in our report -- earnings report that we just put out is that we look at GAAP versus non-GAAP. And certainly, from a non-GAAP standpoint, you can see a pretty good increase in the non-GAAP items, including stock-based compensation as our stock price has risen over the course of time. So I think that we don't, again, give specific guidance, but I think you can think of this as a run rate that we'll continue to adjust and grow as the business needs. Sujay, do you want to take the...

Sujay Kango -- Executive Vice President and Chief Commercial Officer

Yes. No. So -- and in regards to the myelofibrosis opportunity, as you can imagine, within myelofibrosis, we are investigating the program in a Phase III study. And part of that Phase II/Phase III program is really looking at it in anemia and the current treatments that are being utilized also have an inherent sort of basis of at least half of the patients or more end up with anemia. So when you sort of look at the overall opportunity, if you take the 50% of the patients that have anemia as well as myelofibrosis causing anemia by itself, you can assume that there are about 35 or so thousand patients between the U.S. and the core European markets that would represent some opportunity for us. So that's a relatively large patient population that we could serve with regards to the underlying anemia, whether due to the disease or due to the treatments that have been utilized. Okay?

Anna Baran -- SVB -- Analyst

Okay.

Sujay Kango -- Executive Vice President and Chief Commercial Officer

Thank you.

Operator

Our next question comes from the line of Leland Gershell from Oppenheimer. You may now ask your question.

Leland Gershell -- Oppenheimer -- Analyst

Hey, Habib. Thank you very much. Actually, my questions have already been asked and answered for the most part. I just wanted to check again on the COMMANDS study, to what extent do you think that COVID, the Delta variant could impact enrollment time lines? I think that may have been asked, but not sure if I got it.

Habib Dable -- President and Chief Executive Officer

Yes. Thanks, Leland. Yes, we did talk a little bit about COMMANDS in terms of the potential impact. I guess at the end of the day, we have given guidance that we expect this study to read out at the end of '22 or in early '23. And our confidence on delivering on that has not changed.

Leland Gershell -- Oppenheimer -- Analyst

Okay, terrific. Thanks very much for answering.

Habib Dable -- President and Chief Executive Officer

Yes. Thanks for your question, Leland.

Operator

Our next question comes from the line of Corinne Jenkins of Goldman Sachs. Your line is open.

Corinne Jenkins -- Goldman Sachs -- Analyst

Good afternoon. So as you think about getting the ZENITH and HYPERION and CADENCE studies all up and running through the rest of the year, to what extent can you find some efficiencies given the similarities across patient populations? Can you use some of the same clinical trial sites? Is there anything else that you'd highlight?

Habib Dable -- President and Chief Executive Officer

Yes. So great question, Corinne, and I mean, I'll obviously hand it over to Jay. But I think what you're touching on is really the heart of our strategy in terms of building a leadership position in rare pulmonary diseases in general. We are building tremendous competencies as an organization in clinical trial design, understanding the way that the payers are thinking about this space, understanding what's important to patients through our intimacy with the patient advocacy groups, the sites you talk about. And it's not only around HYPERION, CADENCE.

It's also the way we're thinking about 1334 and what are the relationships within interstitial lung disease, how are we thinking about that interface across different diseases within rare pulmonary. And so I would say that the learning, the efficiencies, the expertise, that institutional know-how that we're gaining as a company is only expanding every day, and we are able to benefit from that and to bring innovation and value to patients in ways that we've never been able to do before. But maybe, Jay, I don't know if there's anything specific about the studies that were up and running that you can comment on, but I'm just thrilled with our ability to continue to get smarter, get sharper and get more efficient in this disease area.

Jay T. Backstrom -- Head of Research and Development

Yes. Maybe just to add to the benefit that we have with multiple protocols, I mean it does afford centers and we have many that are going and actually opening up all three trials, to then be able to put a patient on any one of those three studies. So for example, if they don't meet eligibility criteria for one, they could certainly meet it for another. And in fact, that's happening as we speak. So I mean, I think it's been really good. We've made great progress on the program. Every single one of our studies are posted on clintrials.gov.

Frankly, we've just opened up HYPERION to recruitment today, so you'll see that switch flipped on clintrials.gov from now recruiting. So progress has been good. A lot of interest and enthusiasm across the investigative sites, and we're taking full advantage of the fact that we have many that want to work on all of our studies.

Corinne Jenkins -- Goldman Sachs -- Analyst

Great, thank you.

Operator

Our last question comes from the line of Kennen MacKay from RBC Capital Markets.

Jackie -- RBC Capital Markets -- Analyst

It's Jackie on for Kennen. Maybe a 3-part question here. SSc-ILD [Indecipherable] post the trial, [Indecipherable] that's great. Just wondering the rationale behind for you to include SSc patient without ILD in the Phase Ib portion? And then separately for the Phase II portion, looking at the inclusion criteria, [Indecipherable] mild PAH patients. Just wondering like what percent of this trial you're targeting to include base like subgroup. And then are you going to include any Group three PH patients also? And then maybe last part, just are you going to doing some PH-specific measurements for the subgroup throughout this trial?

Habib Dable -- President and Chief Executive Officer

Okay. Thanks, Jackie. I'm going to definitely pass all those to Jay.

Jay T. Backstrom -- Head of Research and Development

Yes. So let's start with your first question. So as I mentioned at the R&D Day, we're including patients with or without ILD, but principally I want to see those that already have skin involvement. And the way we've conducted that first portion of the trial is we're going to use quantitative system pharmacology modeling to really help us kind of drive hopefully quickly the dosing schedule that we want to take into Phase II. So those with skin involvement, it affords us the opportunity to use skin biopsies and some of the changes occurring to gene expression profiles, etc, to give us that guidance, so hence, the skin. It turns out that we do want some patients with the ILD because [FX, for spot of] capacity will be the measure in the Phase II. However, what we do know is that there is often an early lung involvement even in those that don't officially have been declared that, and so we'll get some insight into what's going on with those patients as well. But principally, it will help us guide for dosing. With respect to the Phase II portion, we've given some ideas of what that population as we want to go forward. We're not honing specifically on PH as such.

As you know, there's an overlap, but we are looking at the scleroderma with the interstitial lung disease component. Although, to your point, connected tissue disease does contribute to some of the Group one data. So really, we're focusing on this actually indication. I think that answered them all.

Jackie -- RBC Capital Markets -- Analyst

Yes, I got it. It's very helpful, thank you.

Operator

We have now reached the end of the Questions and Answers session. I will now turn the call over back to our Chief Executive Officer, Mr. Habib Dable for closing remarks.

Habib Dable -- President and Chief Executive Officer

Okay. Thank you. Thanks, everybody, for joining us, and very much looking forward to connecting with many of you at the upcoming conferences this fall. And in the meantime, if you have any questions, please don't hesitate to reach out to Todd or Jamie, and I wish you all a great evening.

Operator

[Operator Closing Remarks]

Duration: 35 minutes

Call participants:

Jamie Bernard -- Associate Director of Investor Relations

Habib Dable -- President and Chief Executive Officer

Kevin McLaughlin -- Chief Financial Officer

Jay T. Backstrom -- Head of Research and Development

Sujay Kango -- Executive Vice President and Chief Commercial Officer

Yaron Werber -- Cowen -- Analyst

Carter Gould -- Barclays -- Analyst

Alex Nackenoff -- Raymond James -- Analyst

Anna Baran -- SVB -- Analyst

Leland Gershell -- Oppenheimer -- Analyst

Corinne Jenkins -- Goldman Sachs -- Analyst

Jackie -- RBC Capital Markets -- Analyst

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