Geron Corporation (GERN) Q2 2021 Earnings Report, Transcript and Summary

Ladies and gentlemen, this is the Operator for this conference call. We'll begin in 2 minutes. Until that time, your lines will again be placed on hold. Thank you for your patience. Again, ladies and gentlemen, this is the Operator for this conference call. We'll begin in 2 minutes. Until that time, your lines will again be placed on hold. Thank you for your patience. Ladies and gentlemen, thank you for standing by, and welcome to the Q2, 2021 Geron Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Ms. Olivia Bloom. Please go ahead.

All right. Thank you very much, [Grace] (ph). And good afternoon, everyone. Welcome to this conference call to discuss updates on our ongoing imetelstat Phase 3 clinical trials as well as second-quarter financial results. I am joined today by Dr. John Scarlett, Geron's Chairman and Chief Executive Officer, Dr. Aleksandra Rizzo, Geron's Executive Vice President and Chief Medical Officer, and Anil Kapur, Geron's Executive Vice President of Corporate Strategy and Chief Commercial Officer. After the market closed today, we announced updates on our IMerge Phase 3 clinical trial and financial results for our second quarter via a press release, which is available on our website. In addition, an archive of this webcast will be available on our website for 30 days, including the slides being presented today. Before we begin, please note that during the course of this presentation and question-and-answer session, we will make forward-looking statements regarding future events, performance, plans, expectations, and other projections, including those relating to the therapeutic potential of and potential regulatory approval of imetelstat, anticipated clinical and commercial events and related timelines, the sufficiency of Geron's financial resources and other statements that are not historical facts. Actual events or results could differ materially. We refer you to the discussions under the heading Risk Factors in Geron's quarterly report on Form 10-Q, for the quarter ended June 30, 2021, which contains and identifies important factors that could cause actual results to differ materially from those contained in the forward-looking statements. We undertake no duty or obligation to update our forward-looking statements. And now I will turn the call over to Dr. Scarlett.

Thanks, Olivia. And good afternoon, everyone. I'm very happy to say we've made a lot of progress since last quarter, particularly with regard to our ongoing IMerge Phase 3 trial in lower-risk MDS. First, in that trial, we've reached 91% of the planned enrollment. We currently expect to complete enrollment in the fourth quarter of this year. In addition, we have accelerated the timing of top-line results in IMerge Phase 3 by three months. We've done this by shortening the follow-up period after the last patient has been enrolled, from 15 months to 12 months for the primary analysis. As a result, we now expect top-line results in the first quarter of 2023. And finally, we expect that our current and projected financial resources will be sufficient to get us to those top-line results. Olivia will expand on this in her section of the call today. Aleksandra, our Chief Medical Officer will comment on the progress we've made in both our ongoing Phase 3 trials, and finally, Anil, our Executive Vice President of Corporate Strategy and Chief Commercial Officer will discuss the market opportunity in lower-risk MDS. So, let's get started.

Thanks, Jeff. The increase in operating expenses for the second quarter and year-to-date periods of 2021, compared to the same period in 2020, was primarily driven by higher development expenses. This increase in R&D expenses includes higher clinical development costs associated with 2 of our ongoing Phase 3 clinical trials, higher personnel-related costs for additional headcount, as well as the conduct of long lead times, manufacturing and quality activities, such as manufacturing validation batches of imetelstat. The increase in general and administrative expenses for the second quarter and year-to-date periods of 2021, compared to the same periods in 2020, primarily reflects new costs in connection with pre-commercial activities, including modernizing the internal infrastructure to support a commercial launch, and higher legal costs. Previously, we provided guidance that our financial resources were sufficient to fund our operations through the end of 2022. As of June 30, 2021, we had $239.1 million in cash, cash equivalents, and marketable securities. We now project these financial resources combined with expected future non-diluted funding from the second tranche under our current debt facility, will fund our operations through the end of the first quarter of 2023. By which time, top-line results from IMerge Phase 3 are expected. With that, I will now turn the call over to Aleksandra, who will review the progress in our Phase 3 clinical trials. Aleksandra.

Thank you, Olivia. And good afternoon, everyone. Let me start with two important updates related to our IMerge Phase 3 clinical trial for which I'm so pleased that we are nearing completion of enrollment. As Chip commented in his introduction, we have achieved 91% of the planned enrollment as of last week and we now expect to complete enrollment in the fourth quarter of 2021. Moving on to another important update about this study. We have determined that the clinical cut-off date for the primary analysis could occur 3 months earlier by shortening the follow-up period from 15 months to 12 months after the last patient has been enrolled. This change is due to the significantly longer enrollment period caused by the COVID-19 pandemic, which has allowed enrolled patients on the study to have longer follow-up than initially planned. In shortening the follow-up period, we estimate that the overall median follow-up in the Phase 3 trial, will be similar to the overall median follow-up in the Phase 2 trial, which as you might remember, was 24 months. Thus, even with the shorter follow-up, we continue to expect to have mature data set that will allow us to assess the safety and efficacy of imetelstat including durability of transfusion independence. Furthermore, since we've already enrolled more than 90% of the patients, we believe the impact of these changes on our efficacy results will be minimal if at all. Accordingly, we submitted a protocol amendment to the FDA and have not received any comments on the proposed change. We plan to distribute the final protocol amendment to all clinical sites shortly. With the revised 12-month follow-up period for the primary analysis, we now project that the top-line results for IMerge Phase 3 will be available in the first quarter of 2023. Also, in July, a regularly scheduled meeting of the Independent Data Monitoring Committee for this study occurred, and the Committee recommended the trial continue without modification. In conclusion, we are making good progress with this study and I look forward to our announcements when we achieve full enrollment of the trial. Turning to IMpactMF, our second ongoing Phase 3 trial. The focus for this trial has been on opening sites which, as you know, is one of the key factors for patient enrollment. As of last week, 55 sites were open for enrollment. We plan to engage over 180 sites in 30 countries across North, South America, Europe, Australia, and Asia. We continue to expect the interim analysis to occur in 2024 and the final analysis in 2025. Just as a reminder, the number of events required to conduct the interim analysis for the study could occur before the enrollment is complete as these events will accrue throughout the enrollment period. With that, I will turn the call over to Anil. Anil?

Thanks, Aleks. And good afternoon, everyone. In my prepared remarks today, I'll provide our perspective regarding 2 topics. Unmet needs and the market dynamics in low-risk MDS that we believe make for an exciting commercial potential for imetelstat. Lower risk MDS, as many of you know, represents approximately 70% of the total MDS patient population. This is an attractive market with a large, addressable patient opportunity. It is a significant unmet need for new therapeutics in this setting, as patients are typically elderly; present with chronic anemia; are dependent on frequent red blood cell transfusions; have a poor quality of life; a heightened risk of transformation to acute myeloid leukemia; and shortened survival. If you look here, we have a schematic of the low-risk MDS landscape. You will see that's an erythropoiesis-stimulating agent or ESA, are the mainstay of treatment for approximately 90% of patients who have symptomatic anemia and do not have deletion 5q. Not all patients respond to or are eligible for ESAs and among responders, responses typically last for between 18 and 24 months. Treatment options are limited for patients who have failed ESAs or are ineligible for the ESAs and may include hypomethylating agents or HMAs, and as of recently, luspatercept. I wanted to also quickly note that HMAs are not a preferred option given their limited benefits. Also, they are not broadly approved across the EU for this indication. Luspatercept was recently approved in 2020 for ESA -failed ringed sideroblast positive patients. This RS+ segment covers only approximately 25% of patients, leaving a significant unmet need for effective therapies for the remaining approximately 75% of lower-risk MDS patients who are RS -. The expected broad imetelstat opportunities are shown by the orange dotted line on this slide. Moving on to imetelstat expected target product profile. In our recent market surveys, community and academic hematologists reaffirm the unmet needs in lower-risk MDS and highlighted how the strengths of imetelstat can address those needs. Key aspects of imetelstat's profile that resonated most strongly with these hematologists are shown on this slide. In particular, I would like to point out that the hematologists appreciated having the ability to treat RS - patients where there is no approved treatment. In addition, they pointed to the durability of transfusion independence. The 24 weeks and the 1-year red blood cell transfusion independent data from the IMerge Phase 2 trials resonated particularly well with physicians, as they felt these outcomes to be more clinically relevant than eight-week transfusion independence. In Europe, both regulators and payers have requested to see 24-week TI data as well. In addition, the potential for disease modification was also very well received. We expect to achieve broad label coverage for imetelstat in ESA relapsed, refractory, non-deletion 5Q, low-risk MDS that includes not only both RS+ and RS - patients but also first-line patients who are ESA ineligible. This sets up imetelstat well for reimbursement across the broader population. Therefore, we expect a highly differentiated position for imetelstat at launch, as well as the ability to significantly penetrate this attractive market, eventually becoming part of the standard of care in lower-risk MDS. This next slide describes the potential market segmentation in more depth. We expect imetelstat patients to come from 4 main groups, all of whom are eligible to be enrolled in our ongoing IMerge Phase 3 trial. The first group, and our key focus, is the ESA relapse and refractory RS - patients. This is the largest opportunity of about 22,000 addressable patients in the U.S. and the 5 largest European markets. These patients currently do not have effective, approved therapy available to them. If IMerge Phase 3 is positive, we expect imetelstat will become the standard of care in this setting. The second group is the ESA relapse and refractory RS+ patients. This group has an addressable patient opportunity of approximately 7,000 patients in the U.S. and the 5 largest European markets. Note also that this is where luspatercept is currently approved. We expect imetelstat to compete favorably with luspatercept in this setting especially in patients with higher baseline transfusion burdens such as greater than 4 units per AP, which is more than 50% of the population in this segment according to our analysis. The third group is drawn from the first-line lower-risk MDS patients with high endogenous serum EPO levels greater than 500 milliunits per ml who are ineligible for the ESAs. This group has an addressable patient opportunity of approximately 3,700 patients in the U.S. and the 5 largest European markets. Finally, the fourth group of patients for imetelstat will come from those who have been previously treated with luspatercept. The ultimate size of this segment is yet to be determined, and we expect it to grow over time. Just to also point out, as many of you may know, both luspatercept and ESA s stimulate the production of the normal red blood cells via the EPO receptors, although at different points in the red blood lifecycle. Based on the fact that we have encouraging data in patients who have failed ESAs, we expect that imetelstat will likely be effective in luspatercept -treated patients. As a reminder, these patients are eligible to be enrolled in our IMerge Phase 3 trial. Based on our current commercial assumptions, and assuming regulatory and fair access to the full patient population I just described, we expect imetelstat to exceed $1.2 billion in potential peak revenue across the U.S. and the 5 largest European markets in lower-risk MDS. Lastly, as shown on this slide, I would like to provide a brief update on our commercialization efforts. With top-line results expected in the first quarter of 2023 and as Human Priority Review, we could potentially launch in the U.S. market in the first half of 2024. As an early preparation for launch, we recently hired senior, highly experienced industry professionals to lead our medical affairs and market access functions. With this team, we will be refining our value proposition across all stakeholders, building a deep understanding of the customer base, and executing on our medical affair plans to ensure a comprehensive understanding of the potential for the imetelstat start within the lower-risk MDS treatment community. As we do this, we are applying a stage-gated milestone-driven investment mindset which will result in the bulk of our commercial investments coming after top-line results are available. We believe imetelstat has the qualities that strongly differentiate it from other drugs currently being marketed or in development today for lower-risk MDS. And we are excited about the progress we are making to bring this potentially transformational product to the market. With that, I will now hand over the call to Chip. Chip?

Thanks very much in Anil. When I turned the call over to Olivia, I said we had a lot to cover today and now you can see one of the reasons I said that. Anil just commented that imetelstat is a potentially transformative product. I would like to add that with imetelstat, we expect to transform Geron into a dynamic commercial Company over the next several years and to become a leader in the treatment of hematologic malignancies by modifying the course of these diseases in order to improve and extend the lives of patients. As we conclude our call today, shown on this slide, we'd like you to know that we plan to host a virtual event for investors and analysts in November when management and key opinion leaders will discuss several broad topics. The first is imetelstat 's potential for disease modification in lower-risk MDS and refractory MF. The next is our expected task to commercializing imetelstat, which served as an expansion of imetelstat 's development plans, including new studies in additional indications. In the fourth, we'll at least briefly cover our early discovery program in second-generation telomerase inhibitors. So please look for further details about this event that will probably come in October of this year. With that Operator, let's please open the call to questions.

Absolutely. Ladies and gentlemen, [Operator Instructions] Your first question comes from the line of Charles Duncan from Cantor Fitzgerald. Your line is open.

Yes. Good afternoon, John and team. Thanks for taking our questions, and congratulations on the enrollment progress in IMerge. I had just a couple of questions, and Aleksandra I guess alluded to this. But with regard to the primary analysis Chip and FDA response, I think she said no comment from FDA. So, you take that as agreement from them that the analysis is done to allow for shorter follow-up is copacetic for -- with them?

Go ahead, Aleks.

Sure. Charles, we submitted a protocol amendment to the FDA over 30 days ago and we have not received any comments on the proposed change. As you know, this is a regular procedure. If you don't hear from the agency within 30 days, you go ahead and the [Inaudible] we're moving ahead.

Okay. Very good. And then with regard to the enrollment thus far, yeah, nearly complete, again, congrats. Any geographic concentration or any color that you can provide on the enrollment pattern relative to the criteria?

I don't think so. I don't think there's any geographic pattern here. We've put so much time and effort, into all the enrollment-boosting activities. And we also believe that the rollout of the vaccines, especially for the elderly patients that are enrolled in our trials has helped. So, with that, the enrollment has really picked up very well. But no, to go back to your question, I don't think there's any pattern there.

Okay. And then regarding the blinded efficacy or blinded interim looks at IDMC look in July, was there any criteria for trials, changes, any efficacy criteria, or anything else that could have come out of that meeting besides safety?

Right. All we hear from the IDMC approval, the documents per the chargers, is whether the study should continue with or without modifications. Just like last time, this time they said continue without modifications, so that's as much as we know.

Okay. The last question is, and I'll probably have to wait till November to get the answer to this. But when you contemplate the commercialization of imetelstat across the globe, do you think that you'll end up working with a partner for ex-U. S? What is your preferred strategy there?

Charles, this is Chip. Yeah. We're actually deep in consideration of that question, doing a lot of analysis, a lot of background work, a lot of work specifically with regard to the drug and the markets. And so, I think today we're not ready to make that -- have that comment, comment on it. But that is our -- that's our plan, and stay tuned as they say.

Okay. Thanks for taking my questions. Congrats on the progress.

Thanks so much.

Thank you. And then the next question comes from the line of Justin Walsh from B. Riley Securities. Your line is open.

Hi, thanks for taking the questions. I'm sure we'll hear more details in November, but maybe you could provide some color on why now is a good time to expand imetelstat's development plans. And how the second-generation telomerase inhibitors are expected to fit into the Geron story.

I'll let Aleks take the first part and I'll take the second part. So additional development plans, you want to just comment about that?

I think that at this point, Justin, we're certainly considering to expand in areas where we have good preclinical data. We believe in our data; we've released strong data and it's always a good time to expand into additional indications if you have good data.

I think I'd add to that, Justin. If you look back at it, a consistent theme that we've had for quite some time has been the exploration of the effect of imetelstat on the molecular basis of disease and in particular on the malignant stem and progenitor cells. And I think we've put together an amazing cascade of data that's really strongly supported that what's going on is that we're selectively targeting and killing malignant stem and progenitor cells in the marrow, and these are the cells and the clones that are responsible for the disease. When we see in both of our big Phase 2 programs really good evidence that there is a significant and selective killing of the malignant stem and progenitor cells and ultimately the marrow repopulates with more normal cells. I think that really encourages us to look at additional indications in heme malignancies. This is what's really needed, right? And so now that we've got both of these Phase 3 studies up running, one almost completed in terms of enrollment, I think it's the right time to look at other opportunities and of course, as Aleksandra says, we have preclinical data, non-clinical data, some of which is public, some of which is not yet public, that really encouraged us. So, stay tuned for November, I think. We're excited to tell you about some of this.

Got it. And how about the second-generation inhibitors, how do those fit in?

Well, I think it's a fair statement to say that imetelstat is really a first-generation telomerase inhibitor. It's the only one that we're really aware of that is in the clinic today and is advanced this far. There are a lot of things we would love to do that you can imagine that would incorporate an even more attractive profile and I think we won't get into that today. I want to save a little bit of the powder for November, but we just -- we decided some time ago that it was really the right time to go off and begin the early stages of a medicinal chemistry effort to identify other scaffolds that would be potentially attractive. And we'll go into that in a little more detail. Obviously, a lot of it remains proprietary. But we did want people to know that we're not just sitting back with imetelstat as our only idea towards telomerase inhibition. We think that the data really strongly supports going forward in multiple different areas and having a new drug [Indiscernible] indication, our new IP, new everything, would be very potentially attractive.

Got it. Well, I'm looking forward to hearing more in November. Next question. So, what, if anything, do you guys think that the recent acquisition of Constellation could tell us about the deal appetite and continued interest in the MS space.

Well, whenever you see when one of your colleagues who is involved in similar areas that you are get acquired and at a very nice premium, I don't think that it makes any of us feel anything but good. Right? I mean, that's just a shareholder, a broadened shareholder perspective. And one that I'd be hard for anybody to argue against. I think that it's an interesting deal. We won't go into how we view various elements of the deal itself, but I will say that it was a healthy price, it was still a relatively early asset, and I'll just say more opportunities will come the way for patients to get better therapy as more resources are put into any of these drugs. Good for them and good for the business and, most of all, good for patients.

Got it. Now, the last question from me. Now that we have patients enrolling in IMpactMF, do you have a sense if most of these patients have seen treatment with fedratinib as well as ruxolitinib, and how that could possibly affect any read-through from IMbark?

I can take that question. I think of it as a moment it's a randomized study, it's meant for registration. And we're really not looking into the data, patient disposition or anything like that. I think it's very early for us to give a comment on that, Justin.

Yeah. I would agree. I would make a separate comment. Our perception is that Fedratinib does not have a huge uptake in the market, but that's really not for us to make comments about. And as Aleks said, it's a big blinded study and hands-off for most of this.

It is not blinded, but is randomized.

Randomized.

And then Phase 3 registration so it -- should not be looking at any of that.

Exactly.

Got it. Sounds good. Thanks for taking the questions.

Thank you. And your next question comes from the line of Stephen Willey from Stifel. Your line is open.

Yeah. Good afternoon. Thanks for taking the questions and congrats on the enrollment progress. Was wondering -- so I know that you're speaking to, I guess, this subgroup of potentially frontline patients that are ESA ineligible and I know that they were, I think, a fractional component of Phase 2 patient population. I'm not sure if you've ever seen activity or clinical data broken out on those types of the natural function of ESA eligibility or ineligibility. But just wondering if you've had any regulatory conversations around your ability to procure a label that would be in the subgroup based upon the Phase 3 IMerge data, specifically in the context of the distribution of ESA in eligible patients looking similar to the Phase 2 experience?

It's a great question, a very thoughtful question. Thank you. Aleks will start.

This is actually Beta that's published in the JTO and also in a couple of our abstracts or conference presentations where we've been reporting data with -- in different subgroups; so, patients with lower or higher than 500 microunits per ml of EPO. And what we've shown is that actually you can achieve transfusion and give the -- 8-week transfusion independence or HIE, irrespective in which subgroup you belong. You're talking specifically for those that are at the high EPO. So, the refractory to EPO patients that have never seen an EPO before, they've never seen any treatment so far. Based on our data, I believe that these patient populations can be included in our label. And we had. We had a good proportion of patients even in our Phase 2 study that was in this bucket, I would say. Chip, if you want to add something to that?

Yeah, we don't usually get into conversations that we've had or haven't had with regulators and it's always speculative or how this works out. But I think the critical element is that there is a small but meaningful percentage of patients who never respond to ESAs and those patients were included in the MEDALIST study, as I recall, and we've seen some patients in our Phase 2. I think we feel pretty comfortable with the idea that we'll be able to access that patient population. How it actually comes out and whether it gets labeled, whether it's via NCCN guidelines, there are a lot of different ways this can play out, but the most important thing is to have data. So, we would expect to have data that would bear on your question, Steve.

Okay. And then maybe just, I guess a follow-up from one of the earlier questions with respect to the next-gen telomerase inhibitors, and again, maybe this is a November Investor Day topic. But are some of these next-gen compounds that you are looking at, are they also oligo-based in terms of

structure? Or is there a way from a median perspective that we should think about next-gen telomerase inhibitors as being a little bit maybe more in the traditional small molecule mold? Thanks.

Well, you're right. I'm going to just tease you on this and not tell you anything more but we will talk about it a little bit more in November. We wanted to make sure people had a good reason to come to that call, and that was one of them was -- we thought this would have some real interest. It's -- it led us to suffice to say right now, that we would like to see a whole host of things that obviously if you start a discovery program many years after your initial discovery was started, there are lots of things that you would change. And we'll talk about some of those and some of the scaffolds and what they look like. It's de novo medicinal chemistry work that we're doing, I'll just put it that way.

Okay. Very interesting. Thanks for taking the questions.

No, thank you.

Thank you. This concludes the Q&A session of the call. I would now like to turn the conference back to John Scarlett for any closing remarks.

Thanks everybody, for joining us today. We really appreciate you taking the time to dial in and participate. And we do expect to present 3 healthcare conferences in September. And webcast details for those events will be available at the beginning of next month, so keep an eye out for that. And we also obviously look forward to virtually seeing many of you at our Investor Day in November. Thank you. Everybody has a good afternoon.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may all disconnect.