Geron Corp (GERN) 2014 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second-quarter 2014 Geron earnings conference call. My name is Crystal and I will be the operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions).

I would now like to turn the conference over to your host for today, Ms. Anna Krassowska, Head of Investor Relations. Please proceed.

Thank you, Crystal. Good afternoon, everyone, and thank you for joining us for the Geron second-quarter 2014 earnings call. With me today are Dr. John Scarlett, our President and Chief Executive Officer; and Olivia Bloom, our Executive Vice President, Finance, and Chief Executive Officer.

This afternoon, we issued a press release that reported results for the second-quarter ended June 30, 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 September 12.

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 our clinical hold, the FDA's listing of our clinical hold, timelines and plans for the IND and IST transfer from Mayo Clinic, and Geron clinical study initiation; obtaining public safety data; the therapeutic potential and safety of imetelstat; and financial or operational protections or requirements, including spending guidance and completion of payment of any dividend in connection with the Asterias transaction.

These statements include 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 heading Management's Discussion and Analysis of Financial Conditions of Results and Operations, and Risk Factors, including in Geron's Quarterly Report on Form 10-Q for the quarter ended June 30, 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 second-quarter operating results from Olivia, and then Chip will review recent events and our activities to address the full clinical hold on our IND. Olivia?

Thanks, Anna. Good afternoon. For the second quarter of 2014, we reported a net loss of $8.7 million or $0.06 per share compared to $8.9 million or $0.07 per share for the comparable 2013 period. Revenues for the second quarter of 2014 were $341,000 compared to $112,000 for the comparable 2013 period. The increase in revenues was due to the receipt of license fees from new research use-only licenses for telomerase.

Interest and other income for the second quarter of 2014 were $99,000 compared to $56,000 for the comparable 2013 period. The increase in interest and other income primarily reflected higher cash and investment balances. We ended the second quarter of 2014 with $147.6 million in cash and investments. We have not incurred any impairment charges on our investment portfolio.

Total operating expenses for the second quarter of 2014 were $9 million compared to $9.1 million for the comparable 2013 period. Research and development expenses for the second quarter of 2014 were $5.2 million compared to $4.8 million for the comparable 2013 period. General and administrative expenses for the second quarter of 2014 were $3.9 million compared to $3.4 million for the comparable 2013 period. Operating expenses for the 2013 second quarter also included restructuring charges of $838,000 in connection with our decision to discontinue our discovery research programs and close our research laboratory facility in April 2013.

The increase in research and development expenses for the 2014 second-quarter compared to the same period in 2013 was primarily the result of higher costs for the manufacturing of imetelstat. This increase was partially offset by reduced personnel-related costs and other research costs resulting from previous restructuring, and the discontinuation of our discovery research programs.

The increase in general and administrative expenses for the three months ending June 30, 2014 compared to the same period 2013 was primarily the result of an increase in stock-based compensation expense. This increase was partially offset by lower patent costs and transaction expenses associated with the closing of the stem cell divestiture in October 2013.

Net loss for the first six months of 2014 was $17.2 million or $0.11 per share compared to $20.8 million or $0.16 per share for the comparable 2013 period. Revenues for the first six months of 2014 were $815,000 compared to $877,000 for the comparable 2013 period.

Interest and other income for the first six months of 2014 was $182,000 compared to $137,000 for the comparable 2013 period. Total operating expenses for the first six months of 2014 were $18.2 million compared to $21.8 million for the comparable 2013 period. Research and development expenses for the first six months of 2014 were $10.4 million compared to $12.7 million for the comparable 2013 period.

General and administrative expenses for the first six months of 2014 were $7.8 million compared to $8.2 million for the comparable 2013 period. Year-to-date operating expenses for 2013 also included restructuring charges of $916,000. The decrease in research and development expenses for the first six months of 2014 compared to the same period in 2013 was primarily a result of reduced personnel-related costs resulting from previous restructuring, and lower clinical trial expenses, with the wind-down of imetelstat trials in solid tumors and GRN1005 trials in patients with brain metastases.

This decrease was partially offset by higher costs for the manufacturing of imetelstat. The decrease in general and administrative expenses for the first six months of 2014 compared to the same period in 2013 was primarily the result of lower patent costs and transaction expenses associated with the closing of the stem cell divestiture in October 2013. This decrease was partially offset by higher stock-based compensation expense.

I will now turn the call over to Chip to review recent Company events. Chip?

Thank you, Olivia. Good afternoon, everyone. I'd like to start with a discussion of the status of Dr. Tefferi's investigator-sponsored trial in patients with myelofibrosis that's being conducted at the Mayo Clinic. That trial, which we call the Myelofibrosis IST, was initiated under an investigator-sponsored IND, which is separate from Geron's IND for imetelstat.

The myelofibrosis IST was placed on partial clinical hold shortly after our IND was placed on full clinical hold. To resolve the clinical hold on this ID, Dr. Tefferi was required to provide follow-up information regarding reversibility of hepatotoxicity for all patients who received imetelstat in the myelofibrosis IST.

In June, we were very pleased to report that the FDA had removed the hold on Dr. Tefferi's IND following his submission of a complete response to the Agency. We reported previously that prior to the partial clinical hold, there were 45 patients receiving imetelstat in the study. Based on enrollment data reported by Mayo Clinic as of July 15, 33 of the 80 enrolled patients were continuing to receive treatment with imetelstat; 23, including 23 of 62 enrolled patients with MF, one out of nine enrolled patients with last phase MF, and all nine out of nine enrolled patients with a subtype of myelodysplastic syndrome, or MDS, known as refractory anemia with ringed sideroblasts, or RARS.

Last week, we announced an agreement between us and the Mayo Clinic that will transfer to Geron the IND under which the myelofibrosis IST has been conducted. Under this agreement, we will also assume sponsorship for the myelofibrosis IST. The study will continue to be conducted at the Mayo Clinic, and Dr. Tefferi will remain as the principal investigator. We in Mayo Clinic have agreed to a plan that targets the transfer of the IND and sponsorship responsibility for the conduct of the study to Geron by the end of September.

Under Geron's sponsorship, the remaining patients in the myelofibrosis IST will continue to receive treatment with imetelstat or continue in follow-up. We do not intend to enroll additional patients in the study. In light of the full clinical hold on our IND, we have committed to FDA that we will not initiate any new clinical studies under the transferred IND from Mayo Clinic until we have had further communication with the Agency regarding our IND, and regarding our development plans for imetelstat in myeloid malignancies with high unmet medical need.

Once we become the sponsor of the myelofibrosis IST, we will assume management of the clinical database. I am pleased to report that Mayo Clinic has already begun to transfer data to us that will update the preliminary analysis we performed last year -- last fall. We believe our updated analysis will first and foremost inform the design of our Phase 2 company-sponsored multicenter study in patients with MF, including additional dose -- information on dosing. For example, Dr. Tefferi tested multiple dosing regimens, and as well, lengthened the dosing interval in some MF patients who experienced a complete remission. We are looking forward to reviewing those data in greater detail.

In addition, we believe the additional and updated data and analysis may also inform our broader clinical development plan. We continue to be enthusiastic about the potential utility of imetelstat in other myeloid malignancies with unmet medical needs, including MDS and acute leukemias. Lastly, the updated safety and efficacy analysis of the data from the myelofibrosis IST and, in particular, the Liver Function Test, or LFT data, will be an important component in our communications with the FDA regarding the full clinical hold on our IND.

As you are aware, the full clinical hold placed by the FDA on our IND for imetelstat in March affected the ongoing trials in essential thrombocythemia and multiple myeloma. This resulted in the remaining patients from those trials discontinuing treatment. This has also delayed our development plan for imetelstat in myelofibrosis because we were unable to initiate any new imetelstat trials in our IND while on full clinical hold. To address the full clinical hold on our IND, we are required to provide clinical follow-up information on patients who experienced LFT abnormalities until they have resolved to normal or baseline, as well as information regarding the reversibility of the liver toxicity after chronic imetelstat administration in animals.

We anticipate our response to the FDA will be comprised of three elements. The first will be information from our previously conducted non-clinical toxicology studies, which will include a six-month study in mice and a nine-month study in cynomolgus monkeys. As we reviewed during our first-quarter conference call, in the imetelstat-treated animals, no clinical or anatomical pathology changes indicative of hepatocellular injury were observed, and no clear signal of biochemical LFT abnormalities were identified.

The second element of our response to the FDA will be clinical information regarding LFT abnormalities, and the incidents and reversibility of those abnormalities in Geron-sponsored trials of imetelstat, as well as in the myelofibrosis IST. So, in addition to the analyses we are conducting on the data and the information being transferred to us from Mayo Clinic, we are working diligently to collect and assess the effect of discontinuation of imetelstat on LFTs in patients who had been enrolled in our ET and multiple myeloma studies.

In order to do this, we had to obtain approval for amended clinical trial protocols from institutional Review Boards at each clinical site that participated in those trials, and subsequently, seek informed consent from the participating patients, some of whom had to be located since they were discontinued from the trial. We expect to submit all of these data to the FDA as an integrated assessment of the LFT observations in the context of overall safety, efficacy, and the relative unmet medical needs in the patient populations treated with imetelstat. Providing this context should enable an informed assessment of the benefit/risk profile of the imetelstat treatment in patients with the high unmet medical needs that characterizes myelofibrosis.

The final component of our response to the FDA will be our proposed development plan for imetelstat in MF. We are refining some elements of our planned Phase 2 trial, such as dosing, potential patient populations, and clinical endpoints, given additional insights to be gained from the recently transferred data from the myelofibrosis IST.

We plan to initiate a company-sponsored clinical trial with imetelstat in MF potentially as early as the first quarter of 2015, pending the outcome of expected interactions with FDA in 2014. These expected interactions include, first, the submission of the complete response to the clinical hold on our IND. Second, achievement of an agreement with FDA that the information in that submission or in subsequent communications adequately addresses the basis for the clinical hold. And third, that the FDA either lists the full clinical hold or permits us to study imetelstat in diseases other than ET or multiple myeloma under a partial clinical hold.

If our assumptions about the timing for this clinical trial in MF change, or the outcome of these interactions with FDA result in any action by the FDA, we expect to update investors. In the meantime, investors should not expect updates on our full clinical hold.

We have been informed by Dr. Tefferi that he has submitted data from the myelofibrosis IST as an abstract to be considered for presentation at the American Society of Hematology, or ASH, annual meeting to be held in San Francisco in December. The abstract contains safety and efficacy data from patients with MF, which have been updated since this presentation at ASH 2013. Unfortunately, updated data sets from the MDS RARS and blast phase MF patients were not available to Dr. Tefferi at the time of the ASH abstract deadline; and, as a consequence, he did not submit abstracts to ASH regarding the treatment outcomes in these IST cohorts.

These data sets were not available because of the extensive data entry and analysis required to update the MF IST cohort data sets in order to support the preparation of this complete response to the FDA partial hold, as well as the activities required to prepare for the transfer of the IND and study sponsorship from Mayo Clinic to Geron. We look forward to date from the patients with MDS RARS and the patients with blast phase MF being presented or published by Dr. Tefferi at a future venue.

This year, we have also initiated collaborations with a select group of academic investigators who are looking into the effects of imetelstat in nonclinical models of MF and other myeloid malignancies such as AML. From these studies, we may gain insight into the potential mechanisms of action of our drug in these malignancies, as well as nonclinical data to support broader clinical development of imetelstat.

We are pleased to report that our collaborators have submitted some of these data as abstracts for ASH 2014. In keeping with standard ASH embargo policies, I will not be making any further comments on any of the submitted data from these collaborators.

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

(Operator Instructions) Cory Kasimov, JPMorgan.

Hi, guys, this is actually Whitney on for Cory. First question is, I guess you said with the 1Q 2015 as early as timing in mind, you said you'd be submitting all the data you mentioned to the FDA. Is that expected in 3Q, 4Q? Can you give us any more granularity on the timing there?

Yes, we expect to respond by the end of 2014 to the FDA, and that will include clinical information regarding LFT abnormalities and the incidents and reversibilities of those abnormalities in Geron-sponsored trials of imetelstat, as well as in Tefferi's myelofibrosis IST. And we would expect to submit those data as an integrated assessment of the LFT observations in the context of the overall safety and efficacy, and relative unmet medical needs in patients/populations being treated with imetelstat.

So we think that providing this context should enable an informed assessment of the benefit/risk profiles for imetelstat treatment in patients with high unmet medical need, such as that that characterizes myelofibrosis.

Got it. And then, second question, I guess, on the last call, you guys had mentioned some work being done on an EU strategy. Any updated thoughts there or potential timing of moving forward, if at all?

Yes, we -- in fact, we did look into that. And I think that based on what we have found out, we are currently focusing primarily on our response -- and first on our response to obtain the FDA's permission to lift the full clinical hold on our IND for imetelstat, or to permit us to study imetelstat under a partial clinical hold.

Got it. Thanks for taking the question.

Sure.

Charles Duncan, Piper Jaffray.

Hi, guys, it's Roy in for Charles. Thanks for taking the question. So, Chip kind of touched on this, but I guess the 1Q timeline sounds pretty quick. I just wonder if you guys could characterize the -- I guess the extent and quality, in your mind, of the data you were able to get for the ET and MM patients? I'm guessing it must be decent, given the -- what seems like a kind of quick timeline. Thanks.

So, that's pretty much the timeline, Roy, that we had laid out when we first started this exercise. So I don't think there are any -- that I'm aware of, any significant changes in it. We've been working really hard at this. And I think that it was a relatively strong effort on our part, obviously, to get that. So I would agree with that.

And so, I feel like this is our expectation. If, for some reason, we're not able to meet that, obviously, we'll update people.

Okay. Can you give us any indication of what proportion of patients you were able to get data for? The majority?

No. We're still in the process of retrieving data and patients. And I think we really shouldn't be characterizing the LFT data at this time. That's going to be between us and the FDA. And when we are in a position to be able to comment about what the actual outcomes of those discussions are, then we'll be happy to discuss it with you.

Okay. Makes sense. Thank you.

Brian Klein, Stifel.

Thanks for taking my questions. In regards to the Tefferi Mayo Clinic IST study, can you give us a flavor for the patients that have come off of that IST in terms of whether they are dropping out of the study due to any off-target effects or safety concerns? Or -- and if any of those patients have maintained their responses?

Unfortunately, Brian, those -- that is the exact topic of discussion in the abstract that ILU has put in, and so it's really under the embargo policy of ASH at this point. So, I don't think we're going to be able to make any comments at this time about it. I'm sorry.

Okay, no problem. In terms of your ET study, where all the patients are now off-therapy, can you give us a sense of whether any patients have remained transfusion-independent?

So, in the ET study, all of the patients were required by FDA to come off of therapy. And so, we were -- you know, we're following up their experiences; predominantly, if they had LFT abnormalities, we're following up. But what happened to those LFT abnormalities, that's been the real focus of our efforts with them.

Okay, great. Thank you very much. Those are my questions.

Thomas Yip, MLV & Co.

Thank you very much for taking my questions. Just have two short questions about the IND transfer. So I was just wondering did the IND transfer trigger any payments to Mayo Clinic? Or are there any future royalty obligations?

We haven't disclosed any of the context of this or any financial arrangements between us. So, I think I'm going to remain silent with regard to that. Eventually, I suspect some of these will be made public, although I'm not sure what will be redacted, so.

Thomas, this is Olivia. I will, just to characterize in general, that once the IST or the clinical study is moved to Geron's sponsorship, it will be treated just as all other company-sponsored trials, where the Company will be sponsoring the sites through support of clinical operations, as well as funding for patient treatment as they go through the protocol. So, in that sense, it would be treated just as if it's any clinical site in a regular company-sponsored trial.

Okay, thanks. Yes, and I understand that some information cannot be disclosed yet. So we're also wondering how much would it cost for Geron to take over the IST to, I guess, to finish the IST at this stage? How much in total?

Well, that's a bit difficult to project, because obviously it depends on how long the patients stay in the trial, and obviously how many patients end up staying in the trial itself. But I would just like to say that we have been supporting the IST historically, so our support obviously will continue financially going forward. So, at this time, I'm not updating guidance for 2014 because of this IND transfer or this assumption of responsibility with the IST.

Okay. Thanks again for taking my questions. And we hope the hold will be lifted soon.

Thanks, Thomas.

Thank you.

Charles Duncan, Piper Jaffray.

Hi, it's Roy again. Just -- sorry for the follow-up, but I have a dumb question -- but did your IND cover myelofibrosis? And if not, do you think this transfer would have occurred even without the hold? Thanks.

So our IND never had a myelofibrosis protocol submitted to it or conducted under the aegis of our own Geron IND. And so the ability to gain access to the full flavor of the data from the myelofibrosis IST was really an important consideration in our planning. So we worked very hard with Mayo Clinic to transfer the IND for that purpose, to get access to the full information and so forth.

Right. Okay. Makes sense. Thanks.

And with no further questions in the queue, I would now like to turn the call over to Dr. Scarlett for closing remarks.

Well, thank you all very much. We appreciate the support for the Company during these challenging times, and look forward to being able to share more and good information with you sometime in the future, hopefully. Thank you all very much.

Ladies and gentlemen, that concludes today's presentation. You may now disconnect. Have a great day.