Earnings Labs

Geron Corporation (GERN)

Q3 2018 Earnings Call· Thu, Nov 1, 2018

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Transcript

Operator

Operator

Good day, ladies and gentlemen and welcome to the Q3 2018 Geron Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] I would now like to introduce your host for today’s conference, Suzanne Messere, Investor Relations. You may begin.

Suzanne Messere

Analyst

Thank you, Sarah, and good afternoon, everyone. Thank you for joining us for today for today’s conference call. I am joined today by Dr. John Scarlett, Geron’s President and Chief Executive Officer; and Olivia Bloom, the Company’s Chief Financial Officer. Please find a copy of our third quarter financial press release, as well as the press release announcing the upcoming oral presentations at ASH on data from IMbark and Part 1 of IMerge on our website under www.geron.com/investors. The abstracts are available on www.hematology.org. On today’s call, management will review financial results from the quarter, highlight recent company events and then we will open it up for questions. A live webcast of the call is also available on our website and will be archived for 30 days. Before we begin, please note that except for statements of historical fact, the statements during this conference call and question and answer are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These include, without limitation, statements regarding, the expectations, plans, timelines and prospects for the imetelstat and Geron including without limitation the timely transition of the entire imetelstat program from Janssen to Geron that IMbark and IMerge will continue, Geron’s plans to initiate the Phase 3 portion of IMerge in mid-2019, the potential for the success of imetelstat and financial or operating projections or requirements of Geron. 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 contingencies, delay, or prevent the start of a Phase 3 portion of IMerge by mid-year 2019, whether regulatory authorities permit any further development of imetelstat on a timely basis, or at all, with our efficacy and safety results cause the benefit risk profile of imetelstat to become unacceptable, whether any circumstances arise that prevent a timely transition of the imetelstat program from Jansen, and whether Geron can obtain sufficient funding to support further development of imetelstat. Additional information and 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 SEC, under the heading Risk Factors, including Geron’s quarterly report on Form 10-Q for the quarter ending September 30, 2018. 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 or circumstances. I will now turn the call over to Dr. John Scarlett, Geron’s President and CEO. Chip?

Dr. John Scarlett

Analyst

Thanks, Suzanne. I would like to welcome everyone to our third quarter conference call. Like to begin by summarizing where Geron stands today. As many of you know, we once again own a 100% of imetelstat, which is a first-in-class molecule with a unique mechanism of action as a telomerase inhibitor. It has demonstrated broad clinical activity in three separate myeloid hematologic malignancies Essential Thrombocythemia, relapsed/refractory intermediate 2 and high-risk MFs and lower risk MF. As we announced this morning, abstracts reporting results from Phase 2 studies in two of these indications relapsed/refractory MF and lower risk MDS have been accepted for oral presentations. This underscores the potential for imetelstat to address the unmet medical need in these indications. As a company, we are in the process of transitioning into a late-stage clinical development. We are expanding our development staffs and plan to start screening and enrollment for our Phase 3 clinical trial in lower risk MDS by mid-year of 2019. In parallel with the start-up of that trial, we will also explore the potential future development of imetelstat in relapsed/refractory MF with both key opinion leaders and regulatory authorities and use the feedback from those discussions to make a decision whether to proceed to Phase 3 in this patient population. And as a result of our fund-raising efforts earlier this year, we are in a strong cash position with approximately $185 million in the bank as of the end of the third quarter. We believe Geron has a bright future and we are very excited to be moving to this next development chapter for the company. On the call today, Olivia will review our third quarter financial results including our balance sheet and how that positions us to support further development of imetelstat. Next, I’ll highlight some important observations in the data from the ASH abstracts that were published this morning. These observations provide further evidence into imetelstat’s broad clinical activity and how its unique mechanism of action could enhance its potential benefit for the treatment of hematologic myeloid malignancies, especially in difficult to treat patients. Then I’ll review the potential market for lower risk MDS and our plans for a Phase 3 clinical trial in this indication. I’ll finish with an update on the status of the imetelstat program transition back to Geron. So now I would like to turn the call over to Olivia, our CFO, who will provide details about our third quarter financial results, and expectations around future development costs. Olivia?

Olivia Bloom

Analyst

Thank you, Chip, and good afternoon, everyone. For the third quarter of 2018, we reported a net loss of $5.6 million or $0.03 per share, compared to $6.9 million or $0.04 per share for the comparable 2017 period. For the first nine months of 2018, we reported a net loss of $19.7 million or $0.11per share compared to $20.5 million or $0.13 per share for the comparable 2017 period. Revenues for the three months and nine months ended September 30, 2018, were $165,000 and $691,000, respectively, compared to $163,000 and $874,000 for the comparable 2017 periods. Revenues in 2018 and 2017 included royalty and license fees under various non-imetelstat license agreements. We adopted the new revenue recognition accounting standard as of January 1, 2018, using the modified retrospective transition method. As a result, 2018 revenues are reported under the new accounting standard, but prior period amounts have not been adjusted and continue to be reported under accounting standards used historically. Therefore, there is a lack of comparability between the 2018 and 2017 revenue amounts being presented. As a result, the decrease in revenues for the nine months ended September 30, 2018, compared to the same period in 2017 reflects not only a reduction in the number of active non-imetelstat license agreements, but also change in the method of accounting. However, we do not expect the adoption of the new revenue recognition accounting standard to have a material impact to our financial statements on an ongoing basis. Total operating expenses for the three and nine months ended September 30, 2018 were $7 million and $22.2 million respectively, compared to $7.4 million and $22.3 million for the comparable 2017 period. Research and development expenses for the three months and nine months ended September 30, 2018, were $2.7 million and $8.4 million, respectively,…

Dr. John Scarlett

Analyst

Thanks, Olivia. This morning we announced the dates and time for the upcoming imetelstat presentations at ASH in a press release that’s available on our website. In compliance on the important policies of ASH has limited our comments on this call to the data and information contained within the abstracts. More mature data from both trials is going to be included in the oral presentation at ASH. Within these, I would like to first highlight some observations about overall survival from the IMbark abstract, which encourage us to explore the potential future development of imetelstat in this relapsed/refractory MF population. As a reminder, IMbark is a Phase 2 trial of two starting doses of imetelstat treatment in patients with intermediate to high risk MF. All of them were relapsed and/or refractory to a JAK inhibitor. IMbark is the only study that’s reported survival data for MF patients who met rigorous subjective criteria for being considered relapsed/refractory JAK inhibitors. We consider this important because this patient population has no proved therapies and current unapproved salvage therapies are not very effective. For MF patients treated with ruxolitinib, the five year discontinuation rate is 75% as reported from the long-term follow-up from the COMFORT-I and II studies. The extension phase of IMbark is ongoing to allow the long-term treatment and follow-up with patients. Data collection during the phase consists of serious adverse events and survival status. We expect updated data from longer-term follow-ups of patients in the extension phase of IMbark with increase amount at ASH including an update on the overall survival. The data in the ASH abstracts were taken from a primary analysis that was initiated by Jansen in the second quarter of 2018. Since we already discussed the final data from the primary endpoints of spleens and symptoms on our…

Operator

Operator

[Operator Instructions] Our first question comes from the line of George Zavoico with B. Riley FBR. Your line is now open.

George Zavoico

Analyst

Hi, Chip, Olivia and Suzanne. Thanks for the update abstracts. Obviously, looks very, very interesting. My question has to do with the myelofibrosis, it seems to me and MDS in terms of prioritizing. The data for both look really, really good, I think and in terms of providing a rational to move forward into a Phase 3. But it sounds like the MF trial is – it needs to little bit more sought before proceeding. Is that probably due to the resources available or is there anything else, that’s involved in that decision?

Dr. John Scarlett

Analyst

Yes, it’s a good question, George. Thank you. Well, I think first of all, we actually feel really comfortable with the MDS status, the protocol we’ve studied now fair number of patients and I think that we are really teed up and pretty much ready to go there. The development path is fairly straight-forward and I think that there aren’t too many big questions that remain. So, that’s getting all of our prioritization right now. The MF is little bit different because, we don’t really have a predecessor studies from other drugs et cetera that have primarily focused on OS. They have always focused as you know, on SVR and TSS which are really oriented more towards the JAK inhibitors and their mechanism of action. So I think we want to really be confident before we start into that study that we have a well-described and well understood path forward. Also, that study could take substantially longer if you are going for OS and certainly it could cost a fair amount of money. So I think we really want to cross all the t's and dot all the i’s there before we decide to move forward.

George Zavoico

Analyst

Okay and with regard to either trial then, maybe especially for the MF, if you go forward with it, because it’s – like you say, there is a little bit more uncertainty in the – design of the protocol and the length. Are you considering an SPA for either or both?

Dr. John Scarlett

Analyst

I think sort of too early to talk about SPAs. As you know, as special protocol assessments often take quite a long time to negotiate. And I don’t think we are really quite there yet. So, I think we want to talk to both outside experts and also to regulators and I think we can then decide what specific regulatory strategy we will adopt.

George Zavoico

Analyst

I see. Okay. Thanks very much. That’s all I have. And I am looking forward to more details at ASH. See you there. Thanks.

Dr. John Scarlett

Analyst

Thanks. Yes, well, we look forward to it too.

Operator

Operator

Thank you. This concludes our question and answer session. I would now like to turn the call back to Suzanne Messere for any further remarks.

Suzanne Messere

Analyst

Thanks, Sarah. Thanks for joining the call today. As announced this morning, we plan to host an investor event on December 10. At the event, an investigator from each the IMbark and IMerge trials will review the oral presentations from ASH. We plan to announce the event details including how to access via web link through a press release at the end of November. Thanks everyone.

Operator

Operator

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