Geron Corp (GERN) 2017 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to our Q3 2017 Geron Earnings Conference Call. (Operator Instructions)

I would now like to turn the call over to Miss Anna Krassowska, Head of Investor Relations. Ma'am, you may begin.

Thank you. Good afternoon, everyone, and thank you for joining us for the Geron Third Quarter 2017 Earnings Call. With me this afternoon are Dr. John Scarlett, our President and Chief Executive Officer; and Olivia Bloom, our Executive Vice President, Finance and Chief Financial Officer.

Today, we issued a press release of reported results for the third quarter ended September 30, 2017. This release can be found on our website at geron.com. Today's call is also being webcast live on our website and will be available for replay through December 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 provision of the Private Securities Litigation Reform Act of 1995. These include, without limitation, statements regarding the expectations, plans, time lines and prospects for imetelstat, including the continued development of imetelstat by Janssen through the IMbark and IMerge clinical trials, feedback from the FDA regarding the safety and efficacy of imetelstat, suggestion of potential efficacy or survival benefit of imetelstat, patent coverage, potential milestones and payments under the Janssen collaboration agreement, including timing and occurrence of a continuation decision and financial or operating projections or requirements. These statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. These risks and uncertainties include, without limitation, whether imetelstat is demonstrated to be safe and efficacious in IMbark and IMerge, Janssen decides to continue developing imetelstat and provides a positive continuation decision to FDA or other health authorities or IRBs or any other factors required that IMbark and/or IMerge be delayed or discontinued. Geron's patents maintain their validity, and Geron will actually receive continuation milestone and royalty payment from Janssen.

Additional information on factors that could cause actual results to differ materially from those in the forward-looking statements are contained in Geron's periodic reports filed with the Securities and Exchange Commission under the heading Risks Factors, including Geron's quarterly report on Form 10-Q for the quarter ending September 30, 2017.

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 under 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 or circumstances.

We'll begin today's call with a summary of the 2017 third quarter operating results from Olivia. And then Chip will review ongoing activities with the imetelstat clinical trials being conducted by Janssen.

Olivia?

Thanks, Anna. Good afternoon. For the third quarter of 2017, the company reported a net loss of $6.9 million or $0.04 per share compared to $3.6 million or $0.02 per share for the third quarter of 2016. Net loss for the first 9 months of 2017 was $20.5 million or $0.13 per share compared to $21.1 million or $0.13 per share for the first 9 months of 2016.

Revenues for the 3 and 9 months ended September 30, 2017, were $163,000 and $874,000, respectively, compared to $5.1 million and $6.1 million for the comparable 2016 period. Revenues for the 3 and 9-month period ended September 30, 2016, included license fee revenue of $5 million, which represented an upfront payment under our license agreement with Janssen Pharmaceuticals Inc., which is an affiliate of Johnson & Johnson that is separate from Janssen Biotech Inc., which is the entity that is collaborating with Geron on the imetelstat program in hematologic malignancies. Areas of focus for Janssen Pharmaceuticals include neurological and infectious diseases. The license agreement with Janssen Pharmaceuticals was signed and became effective in September 2016.

Total operating expenses for the 3 and 9 months ended September 30, 2017, were $7.4 million and $22.3 million, respectively, compared to $9 million and $27.9 million for the comparable 2016 period.

Research and development expenses for the 3 and 9 months ended September 30, 2017, were $2.6 million and $8.5 million, respectively, compared to $4.3 million and $13.9 million dollars for the comparable 2016 period.

General and administrative expenses for the 3 and 9 months ended September 30, 2017, were $4.8 million and $13.8 million, respectively, compared to $4.7 million and $14 million for the comparable 2016 period.

The overall decrease in research and development expenses for the 9-month period ending September 30, 2017, compared to the same period in 2016 primarily reflected lower cost for Geron's proportionate share of clinical development expenses under the imetelstat collaboration with Janssen as well as reduced personnel-related costs.

The overall decrease in general and administrative expenses for the 9-month period ending September 30, 2017, compared to the same period in 2016 primarily reflected lower consulting and legal costs, primarily offset by higher noncash stock-based compensation expense.

We ended the third quarter of 2017 with $112.7 million in cash and investments. We have not incurred any impairment charges on our marketable securities portfolio.

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

Thanks, Olivia. Good afternoon, everyone, and thanks for joining. I'd like to begin today by briefly commenting on the status of IMbark, the Phase II trial in Intermediate-2 and/or high-risk myelofibrosis patients who are refractory to or who have relapsed after treatment with the JAK inhibitor.

First, this trial was ongoing and patients remaining in the treatment phase are containing to receive imetelstat. All safety and efficacy assessments are being conducted as planned in the current protocol, including for survival.

Second, FDA recently requested updated efficacy and safety data, including information regarding deaths in order to address the benefit-risk profile with imetelstat in IMbark and to justify continued treatment of patients in the trial. Janssen has informed us that they have submitted the requested information, including current overall survival data. Related interactions between Janssen and the FDA are ongoing.

Third, Janssen has informed us that to date, median overall survival has not yet been reached in any dosing arm. Therefore, as we announced at the end of July the timing of the primary analysis for IMbark, which includes an assessment of potential survival benefit, will begin upon the earlier of either: first, a prespecified number of deaths occurring in the trial; or second, the end of the third quarter of 2018. After the completion of that IMbark primary analysis, Janssen must make a continuation decision. That is, they must notify us whether they elect to maintain the license rights and continue the development of imetelstat in any indication. Assuming that the primary analysis begins at the end of the third quarter of 2018, we expect that the latest time for Janssen continuation decision would be in the fourth quarter of 2018 or the first quarter of 2019.

I'd like to next review the newly published data from Part 1 of IMerge, which is the ongoing trial of imetelstat in patients with lower-risk MDS, being conducted by Janssen. These clinical data have been accepted for a poster presentation at the American Society of Hematology, or ASH, annual meeting and were published this morning in an abstract on the ASH website at www.hematology.org.

As we've described previously, IMerge is in 2 parts. Part 1 is a Phase II open-label, single-arm trial that's been conducted to date in 32 patients administrating imetelstat intravenously every 4 weeks with a dose of 7.5 milligrams per kilogram.

Part 2, not yet initiated, is designed to be a Phase III study that will be conducted after Part 1 is completed and is designed to confirm, in a randomized and controlled trial, the efficacy and safety of imetelstat in the patient population as well as dosing identified in Part 1.

In lower-risk MDS patients, chronic anemia is the predominant clinical problem. Treatment with an erythropoiesis-stimulating agent, or ESA, such as EPO, can provide an improvement in the anemia, but the effect is transient. As a result, many patients become dependent on frequent red blood cell transfusions to manage symptoms of anemia and fatigue. Transfusion dependency is associated with poor survival because of toxicity associated with iron overload as well as potential infections and allergic reactions.

To be enrolled in IMerge, all patients must have relapsed after or be refractory to treatment within ESA. ESA-naive patients were eligible if their serum EPO level was greater than 500 milliunits per milliliter because in patients with EPO levels this high, ESA treatment is not effective, and they are considered refractory to ESAs.

Among the 32 patients enrolled in Part 1 of IMerge, 28 patients or 88% have been previously treated with ESA, while 13% or 43% -- sorry, 13 patients or 43% had serum EPO greater than 500 milliunits per milliliter. Patients enrolled in the trial must also be dependent on red cell transfusions, requiring at least 4 units of red blood cells during an 8-week period prior to entry into the trial. Among the 32 patients enrolled, red blood cell transfusion dependency was high. The median red blood cell transfusion burden at entry to the trial was 6 units per 8 weeks, ranging from 4 to 14 units.

The ultimate goal for most trials of investigational agents in lower-risk MDS is to enable patients to become transfusion independent for as long as possible. As such, the primary endpoint for both parts of IMerge is the rate or percentage of patients who achieve red blood cell transfusion independence for at least an 8-week consecutive period. This has been a key regulatory endpoint in many disorders associated with anemia and transfusion requirements. Secondary endpoints in IMerge include the rate of 24-week in tranfusion independence and the rate of hematologic improvement. Hematologic improvement is the degree to which the frequency of transfusions are reduced and increases in serum hemoglobin levels are observed.

In addition, various measures on the durability of these transfusions in hematologic responses to imetelstat treatment are also being assessed for IMerge.

As cited in the abstract, using a May 2017 data cutoff and a median follow-up of patients at 48 weeks, efficacy data for imetelstat noted that 34% of the first 32 patients in Part 1 of IMerge achieved red blood cell transfusion independence lasting for at least 8 weeks. Similarly, 63% of patients achieved hematologic improvement.

The original inclusion and exclusion criteria for IMerge did not restrict the number or type of other prior MDS treatments the patient was allowed to have received before entering the trial. And therefore, there were no restrictions to any particular MDS subtype.

Among the first 32 patients enrolled in Part 1, 25% had previously been treated with hypomethylating agents, such as azacitidine or decitabine and 38% with immunomodulatory agent, such as lenalidomide. Approximately half or 56% of patients had not received either HMA or lenalidomide. Also 22% or 7 patients have the del 5q chromosomal abnormality.

Among the 32 patients enrolled in Part 1, a subset of 13 patients had not received prior treatment with either an HMA or lenalidomide and also did not have a del 5q chromosomal abnormality.

In the U.S., hypomethylating agents, or HMAs, are approved to the treatment of both lower-risk and high-risk MDS patients. And the immunomodulatory agent lenalidomide is approved for the approximately 15% of lower-risk MDS patients who have a deletion and a short arm of chromosome 5, the so-called del 5q abnormality.

Physicians in the U.S., particularly outside of the main academic centers, use both HMAs and lenalidomide broadly in lower-risk MDS because there are limited alternative treatment options available.

In contrast, in Europe, HMAs are not approved for lower-risk MDS nor is lenalidomide-approved non-del 5q patients. As a consequence, very few, if any, lower-risk European patients are treated with either lenalidomide or an HMA, at least until they can be characterized as higher-risk MDS patients.

As cited in the abstract, using the same May 2017 data cutoff and a median follow-up of patients at 48 weeks, as was reported for the overall population, the 13 patients without del 5q who were naive to lenalidomide and HMAs showed an increased rate in durability of transfusion independence compared to the overall trial population, with 54% of the 13 patient subset achieving red blood cell transfusion independence lasting for at least 8 weeks. Furthermore, 31% of the 13 patient subset achieved red blood cell transfusion independence lasting for at least 24 weeks compared to 16% of the overall trial population.

In addition, 69% in the n=13 patient subset achieved an erythroid hematologic improvement, suggesting some degree of clinical benefits was observed in the majority of imetelstat-treated patients.

As noted in the abstract, the safety profile in Part 1 was consistent with prior clinical trials of imetelstat in hematologic malignancies, and no new safety signals were identified. The most common adverse events were reversible cytopenias, which were manageable with dose reductions or delays and included grade 3 and grade 4 neutropenia in 66% and 41% of the patients, respectively. Grade 3 and 4 thrombocytopenia was observed in 50% and 19% of patients, respectively. Dose reductions or cycle delays due to adverse events were required for 59% of patients. The safety profile in the 13 patient subset was similar to the overall trial population.

We expect that the poster presented at ASH will include updated data from a more recent data cut. The evening after that poster is presented, Geron will be hosting a webcast event in order to allow all investors to be informed of the updated data.

We and Janssen believe that these results from the 13 patient subset who were naive to lenalidomide and HMAs and who lack the del 5q chromosomal abnormality suggest that imetelstat could offer lower-risk MDS patients a much needed alternative prior to proceeding to HMAs and/or lenalidomide treatment.

In comparison to a 54% 8-week transfusion independence rate observed for imetelstat, much lower rates, approximately 17% for HMAs and 27% for lenalidomide, and no better safety profiles have been previously reported in similar or lower-risk MDS patient population.

As such, we expect that targeting this lower-risk MDS population would not reduce the population of patients potentially eligible for imetelstat, but instead, sequence imetelstat ahead of HMAs and lenalidomide in the treatment paradigm.

I'm pleased to note that Janssen used the data from Part 1 of IMerge to apply to the FDA for fast track designation for imetelstat, which was granted for the treatment of the adult patients with transfusion-dependent anemia due to lower-risk MDS, who were non-del 5q and who were refractory or resistant to treatment within an ESA. We announced this in a press release yesterday morning.

As we announced at the end of July, Part 1 of IMerge is being reopened and expanded to enroll approximately 20 additional patients who are non-del 5q and naive to HMA and lenalidomide treatment. This is intended to increase the experience and confirm the benefit-risk profile of imetelstat in this refined target population.

With the appropriate -- approximately 20 additional patients, the total number of patients in Part 1 who were representative of the refined target patient population will be approximately 30, which was the sample size originally proposed for the protocol for Part 1 on which a decision and a move to Part 2 would be based. Enrollment for this expanded Part 1 is now open at several sites.

In addition to the clinical data from IMerge, 3 preclinical abstracts by academic collaborators were also selected for presentation. All 3 abstracts build on data from previous studies investigating imetelstat effects and mechanism of action in preclinical models of hematologic myeloid malignancies. In an oral presentation, Dr. Steve Lane and colleagues at the University of Queensland Australia, will describe their continuing exploratory work to understand the potential clinical efficacy of imetelstat in AML by using preclinical models derived from patient samples.

In 2 separate poster presentations, Dr. Ronald Hoffman and his colleagues from the Icahn School of Medicine at Mount Sinai, and Dr. Catriona Jamieson and colleagues from the University of California at San Diego will present data from 2 independent preclinical studies investigating the impact of imetelstat on malignant progenitor and stem cells in models of myelofibrosis and blast crisis chronic myeloid leukemia.

We announced the dates and times of the imetelstat presentations at ASH in a press release this morning that is available on our website.

Before we open the call to questions, I will also note that our search and evaluation process to identify and evaluate oncology products, programs and companies for potential acquisition continues.

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

(Operator Instructions) And our first question comes from the line of Chad Messer from Needham. Sir, your line may be on mute. And our next question comes from the line of Charles Duncan from Piper Jaffray.

And congratulations on some of the upcoming abstracts to be presented at ASH. Looks like some early but interesting results that you're seeing certainly in IMerge.

We were very pleased to see the results, Chaz.

So Chip, quick question regarding the recent fast track designation in the MDS patient subset. I guess, I'm wondering, you said that they use that part of the observations to support that, but I'm wondering if you think that, that could impact the strategy or even the time lines for moving from Phase II to Phase III.

An interesting question. Well, let me just comment broadly speaking that for those on the call who may not be as familiar with some of these designations, fast track does give you some additional access to the FDA or, at least, in principle, it does. It's mainly been useful for companies that I'm aware of and prior companies that I have been involved with in terms of being able to submit rolling submissions, which is -- can be very helpful. That is a certain portion of, for example, an NDA prior to having everything done. So it's certainly permissible from that perspective. But it -- all of the -- and the timing may be impacted by the ability to have more frequent conversations with the FDA and, of course, by what I just described because interactions in -- with reviewers of NDAs can be accelerated because of the rolling nature of the submissions. But honestly, I'm not sure that it really would make any difference between -- going between Phase II and Phase III. It's a -- it's encouraging that FDA viewed this positively enough to designate it as a fast track as eligible submissions. But I think we still have to take the same amount of time to really understand the drug. And we certainly will still need to do any of the necessary testing going forward. It doesn't really get you off the hook of providing the typical kinds of proof sources for your data that would be required without it. Accelerated approval is a different story, and this is not accelerated approval. Obviously, accelerated approval has to do with being able to forego some of the later stages of development and being able to do that, if you will, afterwards, in a Phase IV setting. So I don't know if that answers the question, but that's kind of the way I view it

It certainly does. And yes, future lies ahead in my book on that other designation. You mentioned enrolling a few more patients in Part 1. Do you have a sense of time lines for that, or at least time lines for data? Is that something we may be able to look forward to in 2018, say, ASH 2018, about a year from now?

Yes. I mean, I'd love to be able to give you that clarity, but we're just -- we've just now reopened a number of sites. I can say investigator enthusiasm would argue for a pretty rapid enrollment of these additional patients. But I think it -- that's always -- just when the CEO says that, everything slows up, right? So I think we should probably just simply say that stay tuned. And when and if we have a better visibility on that, we'll let you know. But at the moment, I'm pretty confident that things are going to go reasonably well. But we'll see.

Okay. That's helpful. And then, let's say, last question. I'll have to get back to you. I had one additional one I wanted to ask you relative to that. But the other question that I had on the broader program for imetelstat is that thinking about mechanism, and you actually mentioned this in myelofibrosis, that transfusion dependence has some real downside risk for myelodysplastic syndrome. And then -- and obviously, in myelofibrosis, there's some downside risk. So I'm just going back and thinking about mechanism of action for imetelstat. Is -- do you believe that, perhaps, over time, you can get some real survival advantage as well? You did see that was at least one hypomethylating agent, as I recall. And is it possible that you could really be changing the course of disease in both cases?

Right. Well, I think that the way that we believe that imetelstat is, at least, putatively working in all of these myeloproliferative diseases is by suppressing or reducing the proliferative nature of the underlying, in this case, just a clone -- a malignant progenitor cell clone that's causing the disease and causing the dysplastic bone marrows and dysfunctional hematopoiesis. So in principle, if one reduces the proliferative ability of those clones, you would expect to see those kinds of outcomes and potentially survival outcomes. I think we all know that survival must ultimately be demonstrated in relatively large, relatively long life studies with adequate controls. You can try to get a sense of whether or not it's improved. But ultimately, that's a test for sophisticated clinical study. So I think mechanistically, there's reason to believe that this could definitely happen. But the proof will be in the pudding of a large and, as I say, a much more sophisticated study.

But to be clear, both in MDS as well as myelofibrosis, neither indications have historically relied on survival advantage. It's really more of a biomarker change.

Yes, I mean -- I think that we've seen now with ruxolitinib that it's taken quite a few years when you have a reasonably effective therapy to see any kind of survival advantage in MF. And so one would not know exactly what would be required. I think if you were able to demonstrate a survival advantage, obviously, that would -- my assumption is, it's just mine, is that, that would be a trump card, if you will. Like I said, it's a bad word to use these days. It would be a good card to use in the ultimate improvability of, really, any drug and any indication. In MDS -- so in MF, I think it remains on the table. These patients are quite ill. And once they failed a JAK inhibitor, they have very limited survival. So I think that's a realistic place to consider survival criteria. In MDS, in lower-risk MDS, in particular, these patients have a lot longer expected lifespan. So I think that would be, from a clinical trial perspective, quite challenging to demonstrate. There, I think we have a plethora of good non-survival endpoints, such as 8-week TI and HIE rates. So I think we would probably expect that we, like pretty much everyone else, would rely on non-survival endpoints in MDS.

And our next question comes from the line of Tom Shrader from Stifel.

This is Alex Schwartz filling in for Tom Shrader. I just had one question. With today's IMerge abstract, there were some notable imetelstat dose reductions or cycle delays. And just thinking back to ASH 2015, I believe your speaker talked about just the physician learning curve of the drug and that dose reduction might actually make the hematologic adverse events worse, and kind of these physicians may just have to live with the patient's cytopenias, while kind of the stem cells are being replaced -- are replacing the mutilated blood cells. With the additional patient data, do these thoughts still hold true? And kind of are you -- are physicians dosing the drug as you'd like to see? Kind of just what have you learned with these additional patients? Any thoughts would be great.

Alex, thanks for the question. And you're right. it's an interesting and a very relevant question. I'm going to be limited in what I can talk today because we have to stay within the 4 corners of the abstract. I expect there may be some additional data that may be presented at ASH when the data is actually presented. But I can make a couple of broader comments that may bear on your question. So the -- there is -- as you quite rightly pointed out, the abstract today describes the fact that a very significant number of patients did benefit from dose reduction and cycle delays. I'll just simply say that across the program, we have looked very carefully at dosing. And I think we're -- I think that the dose that's described in the abstract today offers a good -- at least in our broad-based view, and again without any specificity, I think it offers a very good starting dose. And the fact that a reasonable number of patients experienced either dose delays or dose reductions, I don't -- I think that probably is a good indicator of ways that these types of drugs are often used in a real practice by hem-oncs. They're pretty comfortable with that. I think we'll have to wait for the more fulsome presentation of the data to talk about the effects of other dosing strategies in the program. But thank you for the question and it's a very thoughtful one. Thank you.

And I'm showing no further questions at this time. I would now like to turn the call back to Ms. Anna Krassowska, Head of Investor Relations for any closing remarks.

Yes. Thank you. I just wanted to take the opportunity to highlight a couple of upcoming events. So as Chip said, we will be hosting an investor event during ASH following the IMerge Part 1 data presentation on December 11. We will announce the time and provide the webcast information in the coming weeks, so do look out for that. But before ASH, we will also be participating in 2 investor conferences, the Stifel Healthcare Conference on November 14 and the Piper Jaffray Healthcare Conference on November 28. So again, look out for our announcements related to those conferences. And thank you for joining today.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.