Geron Corporation (NASDAQ:GERN) Q2 2022 Earnings Conference Call August 11, 2022 4:30 PM ET
Company Participants
Aron Feingold – Vice President, Investor Relations and Corporate Communications
Dr. John Scarlett – Chairman and CEO
Olivia Bloom – Executive Vice President, Finance and CFO and Treasurer
Dr. Faye Feller – Executive Vice President and CMO
Anil Kapur – Executive Vice President, Corporate Strategy and CCO
Conference Call Participants
Kalpit Patel – B. Riley Securities
Joel Beatty – Baird
Stephen Willey – Stifel
Gil Blum – Needham & Company
Operator
Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Geron Earnings Second Quarter 2022 Conference Call. All lines have been placed on mute to prevent any background noise and today’s conference is being recorded. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]
Thank you. Aron Feingold, Vice President of Investor Relations and Corporate Communications, you may now begin your conference.
Aron Feingold
Good afternoon, everyone. Welcome to the Geron Corporation second quarter 2022 conference call. I am Aron Feingold, Geron’s Vice President of Investor Relations and Corporate Communications. I am joined today by the following members of Geron’s management team, Dr. John Scarlett, Chairman and Chief Executive Officer; Olivia Bloom, Executive Vice President of Finance and Chief Financial Officer and Treasurer; Dr. Faye Feller, Executive Vice President and Chief Medical Officer; and Anil Kapur, Executive Vice President of Corporate Strategy and Chief Commercial Officer.
Before we begin, please note that during the course of this presentation and question-and-answer session, we will be making forward-looking statements regarding future events, performance, plans, expectations and other projections, including those relating to the therapeutic potential 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. Therefore, I refer you to the discussion under the heading Risk Factors in Geron’s quarterly report on Form 10-Q for the quarter ended June 30, 2022, which identifies important factors that could cause actual results to differ materially from those contained in the forward-looking statements. Geron undertakes no duty or obligation to update our forward-looking statements.
And now, I will turn the call over to CEO, Dr. Scarlett. Chip?
Dr. John Scarlett
Thanks, Aaron. Good afternoon, everyone. Thanks for joining us today. This is an exciting time to be at Geron. We expect the journey ahead will emphasize potential value creating milestones that reflect imetelstat’s unique and highly differentiated qualities that in turn we believe address many of the current unmet needs of patients with both lower risk myelodysplastic syndromes or MDS and refractory myelofibrosis or MF.
As such, we are planning for an upcoming catalyst-rich period during which we will be focused intensely on the execution that we expect will take us from being a development stage company to a commercial company.
I am personally very excited that we are only five months away from the first of these exciting milestones, which is the disclosure of topline results from our IMerge Phase 3 trial in lower risk MDS that are expected in early January of 2023.
In advance of those topline results, we already actively preparing for two regulatory submissions in the — this indication lower risk MDS. The first expected in the first half of 2023 will be a submission of a U.S. New Drug Application, NDA. And the second which will be the submission of the European marketing authorization application or MAA, which we expect in the second half of 2023.
If the lower risk MDS topline results are positive and these regulatory activities are successful, we expect U.S. approval and commercial launch of imetelstat in lower risk MDS in the first half of 2024.
Also in 2024, we anticipate an interim analysis of the ongoing IMpactMF Phase 3 study in refractory myelofibrosis. This assumes that enrollment meets our expectations and that a sufficient number of events have occurred to enable such analysis.
A positive readout in this trial, which is comparing imetelstat to best available therapy will have major implications. IMpactMF is the only MF study being conducted to-date with the primary endpoint of overall survival. Improvement in overall survival is consistently ranked by hematologists near or at the top of the desired qualities of a new medicine in refractory MF.
Returning to lower risk MDS, we believe imetelstat represents a potentially transformative treatment option, as well as a significant commercial opportunity in this indication. Based on the market research conducted by our commercial team, practicing hematologists cite several key attributes of imetelstat that were observed in the IMerge Phase 2 study and that address current unmet medical needs in this indication.
First, the durability of independent — transfusion independents that was observed in Phase 2 addressed what these hematologists cited is the most significant current unmet need for the lower risk MDS patients.
Second, they cited the expected ability of imetelstat to treat a broader set of patients, including both RS-positive and RS-negative subsets, as well as a broad range of patients with high and very high transfusion burdens.
They believe data such as these would differentiate imetelstat significantly from other currently available therapies in this indication. For example, luspatercept was restricted for use in only RS-positive patients, which represents approximately a quarter of the market.
Third, these hematologists cited the novel mechanism of action of imetelstat. This mechanism is also significantly differentiated from the mechanism of other treatments for lower risk MDS and leads to potential for disease modification.
This disease modifying potential was supported by clinical outcomes in the Phase 2 study, including very meaningful increases in hemoglobin, as well as depletion of malignantly transformed cells after treatment with imetelstat.
These key attributes, as well as a manageable safety profile from the Phase 2 study give us confidence that the outcomes in the Phase 3 trial have the potential to address the unmet needs of the approximately 33,000 patients with lower risk MDS in the U.S. and largest five EU markets who are relapsed and refractory to ESAs. This translates to a significant market opportunity of approximately $1.2 billion in potential peak revenues across these lower risk MDS market.
To capitalize on the potential of this market opportunity, a stage-gated build-out of the U.S. commercial team and plan has begun, which we plan to accelerate if we achieve positive topline results in early January 2023.
For Europe, we are considering our options including potential partners, as well as self-commercialization, with the goal of bringing imetelstat to patients in that marketplace as efficiently and effectively as possible.
Putting these upcoming milestones together, we believe Geron has the necessary elements for significant value creation over the next several years. These include the lower risk MDS Phase 3 topline data, the build-out of the U.S. commercial team and plan, the IMpactMF Phase 3 data from the interim analysis, and the unique product attributes of imetelstat that are expected to allow it to successfully address unmet needs.
In addition to the corporate attributes I have already discussed, another key element that we expect to lead to an ability to deliver the expected value creation is our strong balance sheet. In late March of this year, we raised approximately $70 million in net proceeds from a public follow-on offering.
This past quarter, we secured up to an additional $50 million in potential non-dilutive capital through an amendment to expand our existing loan facility with Hercules Capital and Silicon Valley Bank. These additional debt tranches increase our total available debt facility from up to $75 million to up to $125 million.
We believe these potential additional debt proceeds when added to our current financial resources and the projected proceeds from exercises of current outstanding warrants in 2023 will be sufficient to fund our projected level of operations until the middle of 2024.
The strong balance sheet should also give us flexibility as we consider potential additional strategic funding and partnership opportunities after disclosure of topline results in the lower risk MDS Phase 3 trial in early January of 2023.
Finally, I’d like to comment on our deeply talented management team. We continue to build an employee base that is both experienced and knowledgeable in hematologic malignancies, as well as in the commercial path ahead.
The recent appointment of Dr. Faye Feller as our Chief Medical Officer with Dr. Aleksandra Rizo having transitioned to her new role as Senior Medical and Regulatory Advisor exemplifies the type of management expertise and capabilities in Geron today.
Faye has been a cornerstone in the history of imetelstat’s clinical development. From working on the Phase 2 imetelstat studies at Janssen starting in 2015 to driving our Phase 3 trials and designing our pipeline expansion studies at Geron beginning in 2019, Faye has been instrumental in the design and management of the entire imetelstat development program in hematologic malignancies.
I’d like to give Faye the opportunity to briefly introduce herself on this call. Following that, Olivia will provide a financial update and then I will make my concluding remarks. Faye?
Dr. Faye Feller
Thank you, Chip, for the kind introduction. I am delighted to be speaking to all of you today and to be settling into my new role. I have been very lucky to be involved in the imetelstat journey for the past seven years, beginning at Janssen and then since 2019 at Geron. It is an incredible honor to lead the clinical development effort as Chief Medical Officer, as we plan to readout two pivotal trials for imetelstat over the next two years.
By way of a personal introduction, I am a hematologist to medical oncologists, trained at Mount Sinai and Memorial Sloan-Kettering Cancer Center. I subsequently joined the faculty at Memorial as an attending physician on the leukemia service before joining Janssen.
At Janssen, I was the study physician for multiple clinical trials of early- and late-stage development assets including the IMbark Phase 2 clinical trial of imetelstat, as well as other product candidates, including several in AML.
Since coming to Geron in 2019, I have been the primary medical point of contact with our clinical investigators and involved in all parts of running the Phase 3 trials and designing the pipeline expansion studies.
With that, I will turn the call over to Olivia for a financial update. Olivia?
Olivia Bloom
Thanks, Faye, and thanks to everyone on the call for joining us today. Please refer to the press release we issued this afternoon, which is available on our website for detailed financial results.
As of June 30, 2022, we had approximately $220 million in cash and marketable securities, which includes net proceeds of approximately $70 million from the underwritten public offering we completed in April of this year.
Overall, operating expenses were slightly lower for the three months and six months ended June 30, 2022, compared to the prior period. This overall decline primarily reflects changes in the composition of activities from last year.
For example, the decrease in R&D expenses for the three months and six months period of 2022 compared to the same period in 2021, primarily reflects the net result of decreased manufacturing costs due to the timing of imetelstat manufacturing batches, partially offset by increased personnel related expenses for additional headcount and higher consulting costs related to preparations for topline results and regulatory submissions in lower risk MDS.
The decline in general and administrative expenses for the six months ended June 30, 2022, compared to the same period in 2021, primarily reflects the net results of reduced consulting costs related to modernizing the internal infrastructure to support potential commercial launch and lower legal fees, partially offset by higher personnel related expenses for additional headcount.
We continue to expect non-GAAP total operating expenses up to $150 million for the full year of 2022. Under current planning assumption, we expect to have approximately $130 million in cash and marketable securities at the time of the lower risk MDS topline results in early 2023.
As Chip mentioned, in late June, we amended our existing loan facility with Hercules Capital and Silicon Valley Bank to expand the facility from up to $75 million to up to $125 million. This expansion of our debt facility provides potential access of up to $50 million in additional non-dilutive capital in 2023, which is the year in which we expect lower risk MDS topline results and if the data are supportive, U.S and EU regulatory filings thereafter.
We also project up to $124 million in additional funding in 2023 from potential exercises of currently outstanding warrants. We believe the additional $50 million from potential additional debt proceeds when added to the projected exercise proceeds from outstanding warrants and our current financial resources will be sufficient to fund our projected level of operations, which include stage-gated activity for potential U.S. commercial launch of imetelstat in lower risk MDS until the middle of 2024.
With that, I will now turn the call over to Chip for closing remarks.
Dr. John Scarlett
Thanks, Olivia. Well, I’d like to end where I began, emphasizing what an exciting and important time this is for Geron. We expect imetelstat’s highly differentiated attributes to address many of the significant unmet needs of patients with both lower risk MDS and refractory MF.
As you have heard several times today, we are eagerly anticipating a Phase 3 lower risk MDS readout in early January of 2023. We also believe imetelstat has potential multi-billion dollar market opportunities. And supporting these efforts, as Olivia just described, is a well-funded balance sheet that currently takes us into mid-2024.
I and my colleagues believe this set of circumstances has the potential to transform Geron into a leader in the treatment of hematologic malignancies and to bring significant value to patients and shareholders.
Thank you very much for listening today. Operator, please open the call to questions.
Question-and-Answer Session
Operator
[Operator Instructions] Your first question comes from the line of Kalpit Patel from B. Riley Securities. Your line is open.
Kalpit Patel
Yeah. Hey. Good morning and…
Dr. John Scarlett
Hi, Kalpit.
Kalpit Patel
… thanks for…
Dr. John Scarlett
Good morning.
Kalpit Patel
Okay. Good morning. Good afternoon. Thanks for taking the questions. I guess, first, starting with the lower risk MDS program, as you start to sort of get closer to the final stages and assuming that trial reads out positive, how are you thinking about the potential utilization in the real world? You touched on this in the prepared remarks for RS-positive and RS-negative patients, but would you think the drug would be more likely to be reserved for patients who have a greater transfusion burden, and perhaps, those who are unlikely to use luspatercept, just any more color on that would be useful?
Dr. John Scarlett
Thanks a lot. I think this would best be taken first by Anil Kapur, our Chief Commercial Officer, who will have a few comments. Thanks.
Anil Kapur
Hello, Kalpit. Thank you for the question. So, Kalpit, as you know, we are addressing a very high unmet medical need in patients who are transfusion-dependent post-TSAs. These patients have shortened survival and they suffer from very poor quality of life.
Despite new advances, some of which you mentioned, what we are clearly seeing in our research and our discussions with clinicians and from scientific and clinical forums is significant dissatisfaction with current options, especially as it relates to durability of transfusion independence and ability to address the need of high transfusion burden patient populations.
In this market, vast majority of the patients have — they come with high transfusion burden. Our data with the Phase 2 study shows unprecedented durability of TI. We have guided in the past that we expect to present 24-week transfusion independence data, which has been regarded as one of the most important clinical outcomes by physicians.
So we expect commercially imetelstat to be very well differentiated position as a standard-of-care across both RS-positive and RS-negative, and with our unique mechanism of action, our ability to kill the malignant stem cell and potential for disease modification, I think, it has set up for big success.
We do not comment on competitor’s products and their adoption, but what is very clear is, the durability of TI in the real world remains a high unmet medical need and it is regularly cited by practicing hematologists across both indications. So I will just stop here.
Kalpit Patel
Okay. That’s very helpful. And then maybe one on the relapsed/refractory myelofibrosis program, the Phase 2 data in the past have suggested improved survival with imetelstat when compared to historical controls. I guess has anything changed in terms of the best available therapy in this relapsed/refractory setting from the days of the historical controls to what’s being used today? I am just trying to delineate if we should expect any changes in that comparator arm relative to what we have seen historically? Thank you.
Dr. John Scarlett
Right. Thanks, Kalpit. I will take that one. It’s pretty straightforward. So, as you know, we did not only the Phase 2 study, the IMbark Phase 2 study, but we also did a real world data study in which we did a careful matching with patients at the Moffitt who were who were relapsed/refractory to JAK inhibitors.
And in that exercise, in that sort of synthetic study, we actually looked very carefully at the BAT, at the best available therapy that would be available. And I think that since our study does exclude JAK inhibitors in the BAT arm, I don’t think we expect to see very much difference. In fact, we have commented a couple of times publicly that we expect the BAT arm in the Phase 3 IMpactMF study to be very similar to what we saw in the real world data study using the Moffitt patients.
Kalpit Patel
Okay. That’s very helpful. And if I could squeeze in one more for…
Dr. John Scarlett
Sure.
Kalpit Patel
… improve MF in the Phase 1 study in combo with rux.
Dr. John Scarlett
Yeah.
Kalpit Patel
I guess how is enrollment going for that trial that started in May? Can you comment on any push back that you might be receiving from investigators or any general thoughts on the additive profile of — maybe additive adverse event profile of the two drugs?
Dr. John Scarlett
That’s a great question. So, I am going to — I will take just the first part, which is super simple. Way early days, we really just got going on this, so probably premature to comment about the pace of enrollment. But, Faye, maybe you want to talk about the question of how investigators are sort of looking at this and how they are thinking about the potential combination of rux and imetelstat in frontline?
Dr. Faye Feller
All right. Thanks, Chip. Thanks for the question. So today we have opened two of the three sites and we continue to receive positive feedback from investigators on combination therapy. The field is headed towards combination therapy and we are — we remain confident.
Kalpit Patel
Okay. Thank you very much. Thanks for taking my questions.
Dr. John Scarlett
You bet. Thank you, Kalpit.
Operator
Your next question comes from the line of Joel Beatty from Baird. Your line is open.
Joel Beatty
Hi. Thanks for…
Dr. John Scarlett
Hi, Joel.
Joel Beatty
… taking the questions. Hi. The first one is on IMerge Phase 3 trial in MDS, are you able to share how the dropout rate or dose reductions or different measures like that are looking compared to expectations.
Dr. John Scarlett
So, Joel, we — first of all, number one, we remain blinded to the study. Number two, we are in pharmaceutical development terms, we are pretty much there and we will see the results soon enough. So we would not be making any comments about the conduct of that study or any sort of interim looks or anything like that. We haven’t done them. So, I am afraid, we will have to wait to see all of that sort of data come out in early January.
Joel Beatty
Okay. Sure. Yeah. Makes sense. And that certainly is coming soon now. All right. So assuming the trial is successful, what would the filing timeline be, is it — are you able to narrow it down to what part of 2023 and beyond the trial results from IMerge, what else remains to be done before filing?
Dr. John Scarlett
Sure. We can give you a little bit of color on that. We said that, we expect the filing to be or the submission, I guess, I should say, specifically, to be made in the first half of 2023. As you know, there is a couple of months that go by usually while the FDA looks at that and then they officially file it. But I — we have simply given guidance that we expect the filing in the first half.
There’s been a ton of activity as you would expect. There are many modules to an NDA, the — only one of which really relies on the final data from the Phase 3 in this case. So all the preclinical has been worked on extensively, the CMC, the quality, modules.
So I think, I would — and pretty much everything. So I think, I would say, we have a very good head start on it all and that’s why we can give that kind of comfort in terms of filing, sorry, submitting the NDA. So I think we feel very good about that.
Joel Beatty
Great. Thank you.
Dr. John Scarlett
Sure.
Operator
And your next question comes from the line of Stephen Willey from Stifel. Your line is open.
Stephen Willey
Yeah. Good afternoon. Thanks for taking the questions. On the BD front, I know you mentioned wanting to maybe explore partnership opportunities on the back of IMerge data. Can you say if you have had any kind of preliminary discussions with any strategies thus far and is it safe to assume that any deal would also have to contemplate the option of imetelstat within MF as well?
Dr. John Scarlett
So, let me take the latter part first. I think that it would be extremely difficult and probably practically impossible to split indications here. I mean 98%, 99% of the time as we all know, indications don’t get split in any type of partnership opportunity.
But in this case, because there — many of the investigators or many of the treating physicians are the same, et cetera, there are other kinds of getting certain diseases not only biologically but also from a practice perspective, I think, would be pretty impossible. So I think you can assume that if everything would involve both indications and we see them both as huge value drivers.
The second question, I can’t really comment on. Obviously, we have a — we hired Ed Koval as our Chief Business Officer at the end of last year. You can certainly imagine that he and others are busy.
But I think beyond that, it would be not appropriate for us to make any comments. We remain — except to say that, we remain very committed to seeing this product on the market, Steve. We believe it brings huge benefit to patients. It obviously is a key value driver for us.
So when we look at all the different options that I suspect will be available or at least some of — some will be available after the turn of the cards in the beginning of next year. I think we will keep that in mind and we are building out a very robust commercial group and fully expect to be prepared to launch that product on time whenever we have the opportunity and do so enthusiastically. So I don’t know, Anil, is there anything else we should say about that or is that adequate from your perspective?
Anil Kapur
Adequate from my perspective. Nothing more to add on that.
Dr. John Scarlett
Okay. All right. Thanks.
Stephen Willey
And then just a follow-up, so the telomere study which is, I guess, the investigator-sponsored study on relapsed/refactory AML. Can you tell us with the starting dose of imetelstat will be in that study, specifically in combination with venetoclax and just curious how you think those two drugs will get along considering some of the overlap on the hem tox side?
Dr. John Scarlett
Yeah. I am going to turn that over to Faye, but just to be crystal clear, telomere itself is in AML, right? And as you quite rightly pointed out, it’s in post-azac [ph] or post-venetoclax treated relapsed/refractory AML patients, but I think that’s what you were asking about?
Stephen Willey
So it’s in post-venetoclax?
Dr. John Scarlett
Yeah. So Faye can explain the design of telomere.
Dr. Faye Feller
Thanks, Chip, and thanks for the question. So telomere is in relapsed/refractory AML and patients can have had exposure to venetoclax or HMA previously or they may not have and/or either of them. So in terms of the dose, I don’t believe we could release that publicly. Of course, I cannot comment on it.
Stephen Willey
Okay. But it is a single agent.
Dr. John Scarlett
Yeah. But we can, yeah. It’s…
Dr. Faye Feller
Yeah.
Dr. John Scarlett
But just so we can be crystal clear, the — in — it’s in AML, and Faye, it’s also — so it’s in combination, there are sort of two parts to it right there. It’s in combination with venetoclax or it’s in combination…
Dr. Faye Feller
One part is in combination…
Dr. John Scarlett
… with azacitidine.
Dr. Faye Feller
One arm is in combination imetelstat and venetoclax and another arm is combination imetelstat and azacitidine.
Stephen Willey
Okay.
Dr. John Scarlett
Hope that helps, Stephen.
Stephen Willey
Thanks.
Operator
[Operator Instructions] Your next question comes from the line of Stephen Willey, sorry, from Gil Blum from Needham & Company. Your line is open.
Gil Blum
Hi, everyone, and thanks for taking.
Dr. John Scarlett
Hi, Gil.
Gil Blum
…our singular question. A bit of a follow-up on that earlier luspatercept angle, maybe I will attack it from a different direction. So it looks like luspatercept is expected to reach a blockbuster status by 2023 and this is despite being restricted by harsh status. Do you think this JAK potential for more impressive penetration, just based on reduction of transfusion burden, I mean, kind of suggests that there is a very unmet population there, right?
Dr. John Scarlett
Anil, I think, this hinting you — your purview.
Anil Kapur
So, Gil, what I can — I don’t know what blockbuster status means. Obviously, it’s a really important advance in lower risk MDS, a disease which saw really no innovation come through for almost a decade. These patients, as I previously highlighted, especially patients who are ESA-relapsed/refractory, they come with significant transfusion burden. What the marketplace is seeing in terms of adoption is the realization of that unmet need.
But now that drug is on the market for some time. We are also seeing real world utilization patterns and the real story emerge around these drugs and that’s why, as I previously stated, durability of transfusion independence becomes a really, really important matrix for these patients to address high unmet medical need.
We are seeing up-dosing phenomenon among competitor drugs as they are searching for responses. Our expectation is that given the fact that we are mechanistically different, the data set that we will bring out is highly differentiated. It is going to showcase and really meet the unmet need across both these populations with the breadth and durability.
And to your question around high transfusion burden, number of patients, I think, you are absolutely right. So ESA literature for the last two decades has been very clear. Patients three plus are literally 60%, 70% of the presenting population, so we are going to bring out data, which is highly relevant to the community and patients really deserve these option. So I will just stop here, Gil, if I answered all your questions and if you have a follow-up, I will try to answer that as well.
Gil Blum
That was very helpful, and yes, I think, that’s, let’s say, you had addressed summary of the items. Thank you.
Dr. John Scarlett
Thanks, Gil.
Operator
And there are no further questions at this time. Ms. Aron Feingold, I turn the call back over to you for some final closing remarks.
Aron Feingold
Thank you so much to everyone for joining us today. We appreciate you taking the time to dial into our call. We look forward to keeping you up-to-date on our progress and hope that you are all well. Thanks so much.
Operator
This concludes today’s conference call. Thank you for your participation. You may now disconnect.
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