Geron Corp (GERN) 2014 Q1 法說會逐字稿

Good day to you, ladies and gentlemen. And welcome to the Q1 2014 Geron earnings conference call. My name is Karen and I will be your operator for today. At this time, all participants for in a listen-only mode and we will conduct a question and answer session towards the end of this conference. (Operator Instructions). As a reminder, this call is being recorded for training purposes. I would now like to turn the call over to Anna Krassowska, head of investor relations. Please go ahead.

Thank you, Karen. Good afternoon, everyone, and thank you for joining us for the Geron first quarter 2014 conference call. With me today are Doctor John Scarlett, our President and Chief Executive Officer, and Olivia Bloom, our Executive Vice President, Finance, and Chief Financial Officer.

This afternoon, we issued a press release that reported results for the first quarter ended March 31, 2014. This release can be found on our website at www.Geron.com. Today's call is also being webcast live on our website and will be available for replay through June 1.

Before we begin, please note that except for statements of historical fact, the statements during this conference call are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These include, without limitation, statements regarding the timelines, prospects, and plans for imetelstat, including anticipated timelines for submitting data to the FDA to address the clinical hold, the FDA's lifting of the clinical hold and clinical study initiation; obtaining positive safety data; the therapeutic potential and safety of imetelstat; and financial or operational projections or requirements, including spending guidance; and any timing of payment of any dividend in connection with the Asterias transaction.

These statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in Geron's periodic reports filed with the Securities and Exchange Commission under the headings Management's Discussion and Analysis of Financial Conditions and Results of Operations, and Risk Factors, including in Geron's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made, and the facts and assumptions underlying the forward-looking statements may change.

Except as required by law, Geron disclaims any obligation to update these forward-looking statements to reflect future information, events, and circumstances. We will begin today's call with a summary of the first quarter operating results from Olivia, and then Chip will review recent events and our beliefs around the timing for initiating new clinical trials for imetelstat. Olivia?

Thanks, Anna. Good afternoon, everyone. For the first quarter of 2014, we reported operating revenues of $474,000 and operating expenses of $9.2 million compared to $765,000 and $12.8 million, respectively, for the comparable 2013 period.

Net loss for the first quarter of 2014 was $8.4 million, or $0.06 per share compared to $11.9 million or $0.09 per share for the comparable 2013 period. Revenues for the first quarter of 2014 and 2013 included royalty and license fee revenues under various agreements.

Interest and other income for the first quarter of 2014 was $83,000 compared to $81,000 for the comparable 2013 period. We expect interest income to be higher in 2014 than in 2013 due to higher cash and investment balances.

Research and development expenses for the first quarter of 2014 were $5.2 million compared to $8 million for the comparable 2013 period. The decrease in R&D expenses was primarily the net result of lower personnel-related costs and reduced clinical trial expenses with the wind down of the imetelstat trials in solid tumors and GRN1005 trials in patients with brain metastases, partially offset by increased manufacturing costs for imetelstat drug product.

General and administrative expenses for the first quarter 2014 were $4 million compared to $4.8 million for the comparable 2013 period. The decrease in G&A expenses primarily reflected reduced patent costs and transaction expenses associated with the closing of the stem cell divestiture in October 2013. We expect G&A expenses to potentially increase during the remainder of the year in connection with the purported class-action lawsuits and derivative lawsuit recently filed against the Company.

We ended the quarter first of 2014 with $153.5 million in cash and investments.

We currently expect cash operating expenses for 2014 will be approximately $35 million to $40 million. This guidance assumes initiation of new clinical trials of imetelstat in hematologic myeloid malignancies, such as a phase 2 study in patients with MF in the first quarter of 2015, with study startup costs being incurred in the fourth quarter 2014, and includes continued manufacturing of imetelstat and support of the Myelofibrosis IST at Mayo Clinic.

I will now turn the call over to Chip to provide more detail on plans for further development of imetelstat. Chip?

Thank you, Olivia. Good afternoon, everyone, and thank you for dialing into our call.

As you all know, our IND for imetelstat is presently on full clinical hold, which affected the ongoing Company-sponsored studies and has resulted in the remaining patients in the ET and myeloma trials discontinuing treatment. Another consequence of the full clinical hold on our IND is that our development plans for imetelstat have been delayed.

We announced in March 2013 that we did not intend to develop imetelstat for ET, but instead plan to focus our development plans on imetelstat in hematologic myeloid malignancies with a higher unmet need, such as MF. However, until the FDA permits us to study such patients, we are unable to submit any new clinical trial protocols to the FDA under our existing IND for imetelstat, and are unable to initiate any new clinical trials for imetelstat in the United States.

As the basis for this hold, the FDA cited a lack of evidence of reversibility of hepatotoxicity, a risk for chronic liver injury, and a lack of adequate follow-up in patients who experienced hepatotoxicity. I will discuss what we need to address to do the full clinical hold on our IND after I discuss the status of Dr. Ayalew Tefferi's investigator-sponsored trial in myelofibrosis.

Dr. Tefferi's trial in myelofibrosis, which we called the Myelofibrosis IST, is being conducted at Mayo Clinic under an investigator-sponsored IND, which is separate from Geron's IND. This trial was placed on a partial clinical hold by the FDA shortly after our IND was placed on full clinical hold. The partial clinical hold means that no new patients may be enrolled into the Myelofibrosis IST, but patients who are currently enrolled and who are deriving clinical benefit may continue to receive treatment with imetelstat.

Dr. Tefferi had already ceased enrolling new patients in the Myelofibrosis IST in January 2014, having enrolled approximately 79 patients. This number included nine patients with blast-phase MF and nine patients with a subtype of myelodysplastic syndrome, or MDS, known as refractory anemia with ringed sideroblasts, or RARS.

In their notice to us, Mayo Clinic did not indicate that its decision to cease enrollment in the Myelofibrosis IST was due to any concerns regarding efficacy or safety. According to Dr. Tefferi, just prior to the partial clinical hold, 45 patients remained in the study.

The reason cited by the FDA for the partial clinical hold on the Myelofibrosis IST was that a safety signal of hepatotoxicity had been identified in clinical trials of imetelstat, and that it was not known if this hepatotoxicity is reversible. In order to resolve the partial clinical hold on the Myelofibrosis IST, Dr. Tefferi is required to provide the FDA with follow-up liver function test, or LFT, information for all patients who received imetelstat in the Myelofibrosis IST.

For patients who did not experience any LFT abnormality, LFT follow-up data needs to be obtained until 30 days after the last imetelstat dose. For patients who experienced any LFT abnormality, follow-up LFT data must be updated to resolution to baseline, or to within the normal range for at least two consecutive determinations.

Dr. Tefferi has informed us that he and the team at Mayo Clinic are working to compile and analyze these LFT data, and that they intend to submit the LFT data and their analysis of those data to the FDA to address the partial clinical hold. At some point after Mayo submit their data package to the FDA, we expect to have access to the contents of that submission. But investors should not expect an update as these are Mayo's, and not guarantee Geron's data. We would expect to inform investors if and when the FDA takes action on Dr. Tefferi's IND.

Dr. Tefferi has also informed us that he intends to submit several abstracts for presentation at the 2014 annual meeting of the American Society of Hematology, scheduled for December of this year. The first is expected to include updated follow-up efficacy and safety data from the imetelstat-treated patients with myelofibrosis that he reported at last year's ASH meeting, as well as data from additional myelofibrosis patients who have been subsequently treated with imetelstat in his IST. An abstract with data from the MDS RARS patients treated with imetelstat in his IST, and an abstract with data from patients with blast-phase MF treated in his IST are also planned.

I'd like to switch back to our IND and our plans for further development of imetelstat. To address the full clinical hold on our IND, we are required to provide the FDA information regarding the reversibility of liver toxicity after chronic administration in animals, and to provide clinical follow-up information in patients who experienced LFT abnormalities until these have resolved to normal or baseline.

To address the nonclinical information, we have reviewed data from our nonclinical toxicology studies of long-term administration of imetelstat in animals that were conducted previously. These studies included a six-month study in mice and a nine-month study in cynomolgus monkeys. In these studies, no consistent biochemical LFT abnormalities were identified as being associated with imetelstat treatment.

In light of the clinical hold, we have had the results of these studies re-examined by two external nonclinical toxicology experts, one of whom has specific expertise in oligonucleotides and oncology products. This review has confirmed that there were no clinical or pathologic changes that would indicate hepatocellular injury in the imetelstat-treated animals. We are currently assessing whether we can identify any subtle changes in the LFTs that may be helpful in assessing reversibility of imetelstat treatment effects in the animals after drug was discontinued.

To address the required clinical information regarding the reversibility of LFT abnormalities observed in patients treated in our ET and myeloma studies, we are currently pursuing the necessary activities to enable us to collect and analyze LFT and other information from patients who recently discontinued imetelstat due to the clinical hold, as well as the patients who had previously discontinued from these trials for other reasons.

Where possible, we are committed to collecting and analyzing long-term follow-up information on LFT reversibility. However, this process is time intensive with some aspects that are not within our control.

For example, we have amended our clinical trial protocols to allow for a longer follow-up of patients after discontinuing imetelstat, and these must be approved by the IRB at each site. In addition, an appropriate informed consent must be obtained from each of the relevant patients to permit us to collect LFT information as well as other relevant information, such as subsequent therapies.

Also, following up on all the patients is challenging, because many patients have already left our clinical trials and may have returned to the care of their primary treating physicians, or may be lost to follow-up for other reasons. Both the timing for submitting the requisite data and information and resolving the clinical hold on our IND are uncertain, and are dependent on several factors including the timing of obtaining clinical information and data being collected from our studies and Dr. Tefferi's Myelofibrosis IST, the results of that information and data, probably and possibly on the assessment of the benefit risk profile when imetelstat is used to treat diseases such as MF, which have a high unmet medical need.

We believe there may be multiple scenarios regarding timing. For example if data from a subset of imetelstat-treated patients with hematologic malignancies, such as patients in Dr. Tefferi's Myelofibrosis IST, are obtained and submitted in a timely manner, and adequately address reversibility of LFT abnormalities, or suggest an acceptable benefit/risk profile in high unmet medical need indications, we might possibly be able to initiate a Geron-sponsored phase 2 clinical trial of imetelstat in MF as early as the first quarter of 2015.

On the other hand, if such data are not obtained in a timely manner or are inadequate to address reversibility of LFP abnormalities or the risk of chronic liver injury, then initiation of Geron-sponsored clinical trial of imetelstat in MF in the United States would be further delayed. At this time, it is difficult to project the possible extent of such a delay in the absence of the clinical information and data being collected from our studies and from Dr. Tefferi's Myelofibrosis IST. For that reason, we are exploring on a parallel track our options for pursuing development of imetelstat outside of the United States, starting in Europe.

With that, operator, let's open the call to questions.

(Operator Instructions) Brian Klein, Stifel Nicolaus.

First, on the ET patients, I was wondering if you could give us a quick update and if any of the patients that were previously treated with imetelstat have relapsed.

Excellent question. I don't have data with regard to that. I am unaware of any, Brian, but I don't have any specific data. Most of them have -- obviously, it has been quite recent that they have come off. Probably most of them, practically speaking, within the last month to six weeks, but I do not have any specific information. Good question, though.

Okay. Thank you. And then the next -- if you could just give us a little bit more color on your plans for ex-US development. What are the gating factors for getting a trial started in Europe and what other things need to be done in order to get that trial started?

So we are in the early stages of looking at a separate approach in Europe. And, of course, they are not at all sure that we need or want to go that approach.

So let me say, first of all, that in our original planning for our next myelofibrosis study, we fully intended to include investigators in investigative sites that were in Europe. And we are proceeding apace and those investigators were fully up to speed and part of our regular strategy.

If, for any reason, we need to actually go down a parallel track, it would mean finding additional investigators in Europe. And it would also mean having interactions with regulatory authorities in Europe to determine whether they would feel comfortable pursuing an MF study.

So what we are doing right now is we are playing out that strategy. We have not yet had any discussions with such regulators. And, of course, we have been in contact with the prospective -- original prospective set of European investigators, but we haven't initiated new investigative sites.

So we will be in the process of doing that over the next foreseeable future, I guess I should say. And if we feel like that is an option that we want to pursue, we will have done the work and then we will probably talk about that in more detail. But, right now, I don't really have a whole lot more to say about it, other than we are in planning stages, engaging various consultants and so forth.

Okay. Great. And then just last question. As we wait for the resolution of the clinical hold, are you looking outside for additional clinical assets to develop? Or do you have any other strategic plans for the Company beyond imetelstat?

Well, first of all, let me say that we had a lot of confidence in imetelstat. I think that, while we can't be as we have laid out in the prepared remarks -- while we can't be absolutely confident, by any means, of timing or ultimate outcomes here, our principal activities today remain very much focused on imetelstat and in hematologic -- myeloid hematologic malignancies with high unmet medical need. Now, if we are not able to pursue that, then obviously that is a very -- that would be a very major retrenchment.

With regard to your specifics about looking elsewhere, we have always been opportunistic and I don't think we have ever stopped looking at other potential assets. And we continue to do so today. But we don't have a specific program associated with heightening that -- those activities because we lack confidence in imetelstat or even as just a backdrop.

Right now, we're really focused on continuing the program with imetelstat. But we continue to be opportunistic and will be opportunistic as time goes on.

Corey Kasimov, JPMorgan.

This is actually Whitney on for Corey. Quick question. To the extent that you may be art able aren't to get some of the follow-up data from the patients, you indicated you kind of have to track some of them down who might be further out from the study, have you guys talked through that scenario with the FDA if you do have a certain percent of missing data? Is there an amount they're willing to accept there?

No. We haven't talked any of those scenarios through the FDA. The way it usually works and certainly the way it is working for us is that we make every possible effort to get every possible scrap of data. And what we have at a certain point, will be what we have. And ideally, it will be sufficient.

I mean, I don't -- I wouldn't expect anybody would think that we would have every single patient, every single LFT after they have ended the study. But I think that when we have a quantum of data that allows us to draw some conclusions, we will probably, at that point, prepare a submission, make it, and go forward from there.

But, we haven't actually asked that question because it would be very hard for them to answer it. It is a pretty impossible question to answer, how much is enough. So usually the answer is, you do everything you possibly can, send it in, and then have a discussion.

Understood. Thank you for taking the question.

Graig Suvannavejh, MLV Company.

Thank you for taking my questions; I have got several. I think on our last call together, there was a question asked about whether you guys had come across any other drugs that had persistent low-grade LFTs. And, at the time, I don't think you had. I don't know if there is anything that you have learned since the last time we all gathered that can kind of give you some indication as to whether it was another drug, what happened, and what the outcome there was.

Yes. We have obviously gone back and have had numerous conversations with a variety of different liver experts, both clinical and preclinical, and we still have not seen any specifics around drugs that have been identified in this manner, particularly with the low-grade persistent elevations of, for example, alkaline phosphatase. We haven't seen anything else that has raised a particular concern.

There are diseases, Greg, that I should point out, that have -- that are not drug-related that have some of these persistent LFT abnormalities that eventually, after many years, turn into something. But we have not seen many drugs with any specificity. And so I'm afraid we haven't found that yet at least.

The next question I have is, what kind of outside help have you brought in on a consulting basis to help you out with this process? Or, if so, do you feel you have the capabilities in-house? And if you have brought others, what incremental spend on SG&A is that going to contribute to 2014 as far as you can tell at this point?

Okay. I will do the best I can on the stems part of it, but let me first of all characterize the types of help. Probably, from what I am going to call an intellectual perspective, there are -- a knowledge perhaps would be a fair way to put it, a knowledge-based perspective. Obviously, we have engaged, as we commented on it now prepared remarks, several preclinical toxicologists and pathologists and preclinical regulatory affairs professionals who look at our prior data, as we commented on, and help us think through possibilities there.

The second thing that we have done is, we have -- are in the process of engaging some additional scientific experts who could help us lay out a program to look at potential mechanistic approaches to trying to understand if there is anything there or not. We haven't actually spent very much money there yet. We have we have been mostly talking to people and organizing our thoughts around what types of nonclinical models we might put imetelstat in, to look at that.

The third thing that we have obviously engaged are a group of regulatory affairs experts to help us make sure we manage our relationships with the FDA and with external regulatory authorities outside of the United States properly. And fourth, we have engaged some additional clinical and clinical operations experts to help us think through what a specific European program might look like, although that is still in its very early ages.

I think none of that is terribly extensive, certainly not yet. And, as some of it matures, we will have a much better feel and should be able to make a better comment. Olivia, do you want to make a comment about this?

Yes. Graig, also, what I would say is that as part of the functions that went into the guidance was inclusive of the engagement of some of these experts in trying to get compacts together for the clinical hold response.

Okay. Thank you very much. Just two quick questions, if I may. What can you tell us about refractory anemia with this rings sideroblasts, as well as blast phase myelofibrosis? Just something that's relatively new to me and just trying to gauge what expectations should or should not be around potential ASH 2014 data.

So RARS is really quite an interesting and relative -- quite poorly served form of myelodysplastic syndrome. It is one of the MDF syndromes. And, in this disease, patients have a presumed underlying progenitor cell clone that resulted in the fact that they do not make adequate red cells. And the vast majority of them become transfusion-dependent. But even if they are not transfusion-dependent, they are always very anemic.

The challenge for RARS has been that there are no effective therapies to our knowledge. Patients basically, if they do become transfusion-dependent, must rely on transfusions. And so if -- and Dr. Tefferi was very interested in this, because there are some characteristics of these patients' clinical presentation that he thought might make them amenable to treatment with imetelstat.

And that was, in particular, the ringed sideroblasts. These ringed sideroblasts are a type of cell that you see that is quite common in RARS and it is relatively uncommon in other hematologic myeloid malignancies, but you do see it occasionally.

And he had seen some responsiveness of patients with ring sideroblasts in the myelofibrosis study (technical difficulty) and look in RARS, since RARS has no effective treatments today. So I think that the data that you see at ASH should be very interesting to see if this would become the third myeloid hematologic malignancy that imetelstat would have effective (inaudible) and I think that would be very interesting. So it would be exciting to see what happens there.

And maybe just a very quick clarifying question and I will jump back in the queue. So just to reiterate, if you are able to -- if the Company were able to have the full clinical hold somehow reclassified into a partial clinical hold, that still would not give you the coverage to be able to initiate a new trial. Is that correct or do I have that wrong?

No, not necessarily. I mean, FDA uses a variety of procedural effects or procedures to allow sponsors to come to agreement with them about what can and cannot be studied. One mechanism is obviously to clear the entire clinical hold. And then you go back to sort of where you started.

Another mechanism that is possible and that has been utilized many times in the industry is that a full clinical hold will be converted to a partial clinical hold, usually under very well-defined circumstances. So for example, if Dr. Tefferi were to come off of hold, and we felt that we had adequate information to proceed with the myelofibrosis study, we might very well ask the FDA to allow us to do so under a partial clinical hold. That would mean we still wouldn't be able to study ET, but we would be able to study myelofibrosis. That is a theoretical construct, but one that is -- that would not be -- that would have precedence behind it.

So I think it is fair to say that FDA and sponsors can come to the conclusions based on science and medicine that makes sense for both the safety of patients and the ability to continue to develop drugs where you might have the opportunity to make a real improvement in patients' lives. That is what we are all after here, and FDA are usually very helpful in that manner. However the process works out, eventually we would hope to get there.

That's encouraging, so thank you very much and good luck.

Roy Buchanan, Piper Jaffray.

Has Tefferi indicated or do you guys have any indication how many patients, if any, he has taken off the study?

I don't have that exact information as we speak today and -- I just don't have it for you. Sorry.

Okay. And I think Brian asked this, but just to make sure, efficacy updates from the Dr. Tefferi study?

Actually, we don't have any efficacy updates per se. Dr. Tefferi and the Mayo Clinic have been very, as you might imagine -- they have been very engaged in responding to the FDA. And that focus has really been on LFT abnormalities and safety-related evaluations. So we have not been talking at all about efficacy, so I don't have any real updates for you.

I mean, I know it is a gating, but once that gets resolved it will probably turn back to efficacy.

Yes. I suspect you are right about that.

All right. So this is kind of speculation, I guess, but if I maybe looked too closely at the EHA presentation and the ASH presentation, I might be able to discern differences in liver enzyme levels between the two patient populations. Am I imagining something there? Is there a basis for that? Any comments on that speculation?

So I think that -- I actually have -- I recently looked at the EHA data but I haven't looked at the ASH presentation recently, so I am a little at a disadvantage. I don't have it in front of me. But, I think what it would say was that -- was your point that there was a higher incidence of LFT abnormalities reported at EHA compared to what Dr. Tefferi reported in his study?

Yes. So there is one grade 2 Hyperbilirubinemia in the ASH presentation -- no AFT, no ALTE.

Right.

(inaudible) left it out, but.

Yes. So I think there are a couple of comments to be made. First of all, that in the ASH presentation, which is, as I recall, was among the (inaudible) equal to 33 patients. This is Dr. Tefferi's ASH presentation.

He had, as you said, two patients who had a grade 2 Hyperbilirubinemia, and did not have any patients that were reported at that time at least with grade 3 or above Hyperbilirubinemia. And there were no obvious patients with other LFT abnormalities. I would comment that, number one -- and that was quite different from that EHA presentation.

Still no grade 3 or grade 4 LST abnormalities associated with the ET study. Sorry -- no grade 4. There were a couple of grade 3 ALTs and one AST, and no grade 3 or grade 4 [al-fos or] bilirubin.

I think the really big difference of these studies was, first of all, that the EHA data, that was a data cut of around May of 2013. And I don't recall the exact number of months on average that patients had been treated, but it was up to roughly 2.5 years, and on average around 14 months if memory serves me correct. And so that's really quite a bit longer band Dr. Tefferi's had been studying patients.

And, of course, remember also that the EHA data for sure was, with everything that was reported, regardless of attribution, et cetera, and regardless of baseline data. So I think it is certainly possible that there will be differences from individual disease basis. And it certainly possible that there (technical difficulty) for example a different level of baseline abnormalities.

For example, in myelofibrosis, we know that in myelofibrosis, patients have extramedullary hematopoiesis. That is their bone marrow isn't working and so they push out their production of red cells and white cells and so forth to the liver and spleen. And so they may have a much higher incidence of baseline abnormalities and some of those may go away.

So I think we are just speculating now. I think it is a little too hard to make a real firm comment about the differences in myelofibrosis patients versus ET and their reactions to imetelstat. It's too much apples and oranges at this point.

Okay. And you probably just answered my next question, but I was going to ask what the typical baseline liver enzyme levels for an ET and/or MF patient, and if there is any meaningful level of baseline risk for the patients (multiple speakers).

Yes. As part of the analysis that is being done right now is to look at, if you will, shift tables and so forth -- to look at what happens to the patients who have baseline abnormalities. Do they get worse? Do they disproportionately get worse? Do they get better? Because, in treatment of some of these disorders, we would absolutely expect some of these patients with baseline LFT abnormalities, particularly in myelofibrosis, if we are actually making a big dent in the disease, we would expect that many of them might get better.

I think Dr. Tefferi's data, when it finally does come out, it is going to be very instructive. We just don't know right now. It is a little speculative. But there will be -- I can almost assure you, baseline abnormalities and what happens to them will be very interesting and important.

I'd now like to turn the call back over to Dr. John Scarlett, CEO, for closing remarks.

Well, thank you. This went on a long time. I think all of you for your continued interest, both in the drug and the Company, and for joining us today. And we look forward to having more information for you and being able to share that with you. Thanks a lot. Everybody, have a good day.

Thank you for joining today's conference. This concludes the presentation. You may now disconnect. Have a good day.