Geron Corp Q2 FY2020 Earnings Call

Ladies and gentlemen, thank you for standing by, and welcome to the Geron Second Quarter 2020 Earnings Conference Call. I would now like to hand the conference over to your speaker today, Suzanne Messere, Head of Investor Relations. Thank you. You may begin. Thank you, Dorothy, and good afternoon, everyone. Thank you for joining us for today's conference call. I am joined today by Dr. John Scarlett, Geron's Chairman and Chief Executive Officer; Olivia Bloom, the company's Chief Financial Officer; and Aleksandra Rizo, our Chief Medical Officer. After the market closed today, we announced our second quarter 2020 financial results and recent events via press release. It is available on our website under www.geron.com/investors. In addition, a live webcast of this call is available on our website and will be archived for 30 days. Before we begin, please note that this presentation and question-and-answer session will contain forward-looking statements relating to Geron's plans, expectations, timelines, beliefs, statements of potentiality, and projection. These include, without limitation, those regarding the timelines for completion of enrollment of the ongoing Phase III Imerge and planned refractory MF clinical trials. The top-line results from the ongoing Phase III Imerge trial and the results from the interim and final analyses from the planned Phase III refractory MF trial. Imetelstat has potential disease-modifying activity, that Geron's existing financial resources will be sufficient to fund operations into the second half of 2022, and that Geron's 2020 operating expense burn will be in the range of $70 million to $75 million. These and other forward-looking 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, those regarding the company that may be unable to overcome all the clinical, safety, efficacy, technical, scientific, operational, manufacturing, and regulatory challenges to enable expected timelines for Imerge and the planned refractory MF clinical trial. That regulatory authorities may not permit the further development of imetelstat on a timely basis or at all, that the COVID-19 pandemic may significantly impact the timelines for both the enrollment and the results of the clinical trials and/or drug supply as well as expectations of operating expenses, and that there may be unexpected operating expenses or events or changes in Geron's plans that cause either the $70 million to $75 million 2020 financial guidance to be revised or the existing financial resources to be insufficient to fund operations into the second half of 2022. Detailed information on the above risks and uncertainties and additional risks, uncertainties and factors that could cause actual results to differ materially from those in the forward-looking statements are explained under the heading Risk Factors, in Geron's quarterly report on Form 10-Q for the quarter ended June 30, 2020, filed with the SEC. Undue reliance should not be placed on forward-looking statements which speak only as of the date they are made. On today's call, Dr. Scarlett plans to make a few introductory comments, after which Ms. Bloom will cover the recent financing, second quarter financial results and 2020 guidance. Dr. Rizo will provide an update regarding the effects of the COVID-19 pandemic on the enrollment in our Phase III trial in lower-risk MDS and discuss key takeaways from the KOL event we hosted last month and cover other recently announced clinical development activities in MDS and MF. Dr. Scarlett will then finish the call with an EU regulatory update and closing remarks. I will now turn the call over to Dr. Scarlett, Geron's Chairman and CEO.

Thanks, Suzanne. I'd like to welcome everyone to our second quarter 2020 conference call. Before we begin, I'd like to make a few comments on the COVID-19 pandemic and how we're managing it. In compliance with state and local rules and for the health and safety of our employees, we're restricting access to our offices. Our employees are continuing to work from home, and we are limiting business travel to essential business needs only. Despite these challenges, employee productivity and efficiency continues to be very high. Later in the call, Aleksandra will comment on the effect of COVID on our clinical activities. So during the second quarter, we achieved several significant milestones that have helped to establish a very positive trajectory for the company. First, after a successful meeting with the FDA, we announced plans to move forward with the Phase III clinical trial in refractory MF using a primary endpoint of overall survival. The OS data from Imbark suggest imetelstat treatment could potentially double the remaining life expectancy for patients who become refractory to JAK inhibitors, which today are the only approved therapies for intermediate 2 and high-risk MF patients. Second, maturing data from the Imerge Phase II trial in lower-risk MDS presented at EHA highlighted extraordinary durability of transfusion independence, including our first-time reporting a 1-year transfusion independence for a significant number of patients. Also at EHA, we reported new analyses from the Imbark Phase II clinical trial in myelofibrosis that correlated the median overall survival observed with other clinical endpoints from the trial, such as improvement in fibrosis. Overall, the EHA data and analyses continue to support the potential disease-modifying activity of imetelstat treatment as evidenced by clinically meaningful durable transfusion independence in lower-risk MDS and improvement in overall survival in relapsed/refractory patients. A third major milestone was achieved when we completed our recent public offering, which netted approximately $140 million, giving us the financial resources to execute our current development plans and to potentially reach 2 significant value inflection points that are expected in the second half of 2022. Those are achieving top-line results from the Imerge Phase III in MDS and completion of enrollment for the planned Phase III in refractory MF. This financing also brought onboard a number of very well-respected biotech specialists and investors including Eco R 1 capital, great point partners, Nea, RA Capital Management and Samsara Biocapital. We believe their investment shows a strong affirmation of both imetelstat and Geron. So I'd like to hand the call over to Olivia to discuss what the financing means for our cash position as well as the second quarter financial results. Olivia?

Thank you, Chip, and good afternoon, everyone. As of June 30, 2020, we had approximately $265 million in cash, cash equivalents and current and noncurrent marketable securities. Our cash position reflects net proceeds of approximately $140 million from a public offering of securities in the second quarter. Based on current planning assumptions, we expect such funds to be sufficient for our operations into the second half of 2022. And as Chip just mentioned, this is when we expect to have top-line results for the Imerge Phase III clinical trial in lower-risk MDS and completion of patient enrollment for the planned Phase III clinical trial in refractory MF. Overall, the financial results for the second quarter and year-to-date periods were in line with our expectations. Operating expense for the 3 and 6 months ended June 30, 2020, were generally higher in comparison to the same period in 2019 due to headcount increases in 2019 across the company, increased activity for the Imerge Phase III trial in lower-risk MDS and new costs associated with validating the imetelstat manufacturing process with our contract manufacturers. We expect operating expenses to be higher in the second half of 2020 in comparison to the first half as we begin to support the two Phase III clinical trials of imetelstat, the ongoing Imerge Phase III trial and the planned Phase III trial in refractory MF. Regarding financial guidance for 2020, we are reiterating our expectation of operating expense burn to range from $70 million to $75 million. This guidance reflects cash conservation measures implemented in April due to the COVID-19 pandemic such as suspending travel and postponing a planned imetelstat proof-of-concept study. It also includes new costs for start-up activity associated with the planned Phase III trial in refractory MF and additional costs for the expansion of clinical trials for the Imerge Phase III trial. Financial guidance is based on a set of assumptions at a point in time. And if the company's plans change, causing assumptions to be revised, then we expect to update guidance at that time. With that, I will now turn the call over to Aleksandra to discuss our recent KOL event and to provide an update on our Phase III clinical development activities. Aleksandra?

Thanks, Olivia, and good afternoon, everyone. Before I describe the key outcomes from our KOL event, I'd like to give a brief update on the enrollment status in the Imerge Phase III trial in lower-risk MDS. As of the end of July 2020, approximately 93% of the 90 clinical sites originally planned for the trial were open for screening and enrollment compared to 68% reported in May. The momentum of patient enrollment has begun to improve as the effects of the COVID-19 pandemic begin to wane in the majority of the countries where our clinical sites are located. We continue to expect patient enrollment to be completed by the end of the first quarter of 2021 subject to potential future delays or interruptions associated with COVID-19. Under current enrollment assumptions, we continue to expect top-line Imerge results to be available in the second half of 2022. To reach our achievements of these goals, we are expanding the trial from 90 to approximately 130 clinical sites, and we expect the majority of the 14 new sites to be open for enrollment by the end of the year. Next, I will highlight key takeaways from the very successful KOL event we hosted in June, where 3 key opinion leaders reprised a total of 4 presentations from the BCR EHA Annual Congress. First, Dr. Valeria Santini, associate professor of hematology at the University of Florence, presented more mature data from 38 patients in the Imerge Phase II trial in lower-risk MDS. As previously reported, the patients in this trial had a very high median transfusion of 8 units per 8 weeks at baseline and 16 of 38 patients or 42% achieved at least an 8-week period of transfusion independence. The most important observation reported with the more mature data set was longer durability of transfusion independence, including 11 of 38 patients or 29% being transfusion-free for more than 1 year and a median duration of transfusion independence of 20 months. Transfusion independence with such durability is significant given the high baseline transfusion, which indicates disease-modifying activity. Furthermore, similar transfusion independence and healthcare improvement rates were observed in both positive and negative patient subgroups. These Imerge Phase II data have been well received by the hematology medical community, and we believe they will generate even more enthusiasm about our ongoing Imerge Phase III trial as well as favorably impact patient enrollment. Our second presenter was Dr. John Mascarenas, associate professor of medicine and director of the adult leukemia program. Dr. Mascarenas reviewed very exciting new analysis from the Imbark trial in patients with relapsed/refractory MF. The results demonstrate that imetelstat achieved dose and exposure-dependent reductions of all known pharmacodynamic markers of telomerase inhibition, including telomerase activity, telomere length, and expression of hTERT, confirming the on-target mechanism of action of imetelstat. Furthermore, this was supported by analysis, indicating better clinical outcomes in patients with shorter telomeres or higher telomerase activity levels, as previously established, these patients are more amenable to a telomerase inhibitor compared to those with longer telomeres and lower telomerase activity. In addition, other analyses presented showed improvement in overall survival that was now correlated with clinical benefits after imetelstat treatment, particularly with improvement in bone marrow fibrosis. Significant dose-dependent reductions in JAK2, CALR, and burden were also reported. Taken together, this new analysis highlights that the observed improvement of fibrosis, reduction in burden, and the improvement in median overall survival indicate potential disease-modifying activity of imetelstat by targeting the underlying malignant myelofibrosis. The third key opinion leader at our event, Dr. Rami Komrokji, vice chair of the malignant hematology department at the Moffitt Cancer Center, shared new analysis of the clinical outcomes from imetelstat treatment in triple-negative myelofibrosis patients in Imbark. Triple-negative patients who do not have the JAK2 or CALR mutations represent 10% to 15% of the myelofibrosis population. This type of patient is associated with shorter survival compared to those carrying these mutations. The inbound data presented showed an improved overall survival of 35.9 months in patients with triple-negative myelofibrosis compared to 24.6 months for non-triple-negative patients. True and symptom response rates were also higher for the triple-negative patients compared to the non-triple-negative ones. Finally, the triple-negative patients enrolled in the study had short telomeres and high telomerase expression levels at baseline. These patients with poor outcomes to current treatment options represent a suitable patient population for imetelstat, and such patients will be eligible to enroll in our planned Phase III trial in refractory myelofibrosis. To summarize, these analyses further support our planned Phase III clinical trial in JAK inhibitor refractory MF, which will be led by two principal investigators, Dr. John Mascarenas from Mount Sinai and Dr. Serge Verstovsek from MD Anderson Cancer Center. We're honored to have them on board as collaborators. The planned Phase III study is a global, randomized, open-label trial in approximately 320 patients with intermediate 2 or high-risk MF who are refractory to JAK inhibitor. The study will compare imetelstat treatment to best available therapy, such as hydroxyurea and danazol, while excluding JAK inhibitors. We expect to reach over 150 sites across North America, South America, Europe, and Asia. Start-up activities are ongoing, such as identifying potential clinical sites for participation as well as finalizing the protocol and obtaining clearance from the institutional review board or ethics committee and regulatory authorities. We plan to open the trial for screening and enrollment by the end of the first quarter of 2021. The trial is designed to have a final analysis for overall survival after more than 50% of the patients planned to be enrolled have died. An interim analysis of overall survival is planned to be conducted up to approximately 70% of the total projected number of death events for the final analysis. If the prespecified statistically significant difference in OS between the two treatment arms is met at the interim analysis, we expect such data could support a registration filing. Our current expectations for this study are to complete patient enrollment in the second half of 2022, to conduct the interim analysis in the first half of 2023, and final analysis in the first half of 2024. However, as you know, both the interim and final analysis are event-driven and could occur at different times than currently projected. If this planned Phase III trial in refractory myelofibrosis is successful, we believe imetelstat will be the first drug to demonstrate a survival benefit in this poor prognosis, high unmet need MF patient population. Now I'd like to hand the call back to Chip.

Thanks, Aleksandra. I'd like to end with a late-breaking positive milestone that was recently reached. At the end of July, the European Commission formally granted orphan drug designation for imetelstat in MDS in the European Union. Imetelstat has already been granted orphan drug designation by the FDA as a potential treatment for MDS. So both of these designations provide for potential market exclusivity. In the case of the EU orphan drug designation, that allows for potential market exclusivity of 10 years from the date of first approval in the orphan indication, making this latest designation a very welcome milestone to achieve. So in closing today, I'd like to comment that Geron is a fundamentally different company than we were a year ago. We have data to show that very meaningful clinical activity in indications where there is significant unmet need. We have an ongoing Phase III trial in lower-risk MDS and a planned Phase III trial in refractory MF, for which we expect to begin screening and enrollment activities by the end of the first quarter of 2021, and we have the financial resources to reach significant value inflection points. We believe these achievements, along with our experienced development team, have strategically positioned Geron to become a leader in the treatment of hematologic myeloid malignancies over the next several years. So with that, we'd now be happy to answer questions. I'll turn the call back over to our operator.

Our first question comes from Gil Blum with Needham & Company.

Congratulations on all the progress. So maybe a quick one on the additional sites that were added to the MDS study. I'm assuming the COVID spread was maybe a criteria here, if you can comment on this.

So I can take that question. Yes. Absolutely, it was the COVID moment that actually made us change the guidance, and you might remember that enrollment will be completed by the end of the first quarter 2021. And just to make sure that we meet the goal in front of us, we decided to go ahead and open additional sites for the study.

Right. Another question I have is about the validation process you discussed with CMOs. Is the company looking at the production at this site with ion commercial production and also to support the two pivotal studies that are ongoing?

Yes, Gil, this is Chip. I'll take that. Absolutely. We are involved in putting together a complete validation program for the commercial scale process. And of course, materials made in that validation program, which will include final validation runs, etc., will also be used for clinical trial activities as well. But the primary purpose is really to validate the commercial process.

Great. And kind of a last one on the myelofibrosis pivotal. As Aleksandra mentioned previously, there were some really interesting data at EHA showing different responses from different genetic makeup populations. Is there any look prospectively into, let's say, triple-negative patients?

I can take that question, Gil. Yes. We, of course, as you indicate, plan to enroll our triple-negative patients will be involved as well in the refractory myelofibrosis study. And we are planning to conduct a subgroup analysis on this patient population as well as other relevant populations. So absolutely, we'll be looking into this.

Our next question comes from the line of Ellen with Stifel.

This is Ellen Sands on for Steve Willey. So maybe just the first one is just a follow-up related to the increase in trial sites for the MDS study. Are these trial sites mostly U.S. based? Are they international or both?

They are distributed globally. We are looking to establish the new 40 sites both nationally and internationally.

Okay. Great. And then can you maybe just remind us what the key differences are in the patient populations between the population that was enrolled in the Phase II Imbark study versus the patient population you'll be looking at for the Phase III study in relapsed MF? I know they're quite similar, but just any of those key differences would be helpful.

Well, the patients in both of our MF studies are similar and are defined as being nonresponsive to the JAK inhibitor. There are technical differences in the eligibility criteria between the two studies, but fundamentally, all these patients are not responsive to a JAK inhibitor.

Okay. Got it. Just very technical differences in eligibility criteria. Maybe just one last question about the Phase III relapsed MF study. So there's a number of other assets in development for relapsed MF. And I know patients are required to have seen a prior JAK inhibitor. Are patients allowed to have participated in a previous clinical trial for an investigational product that is not a JAK inhibitor? Or is that prohibited from enrollment?

As long as the patient was refractory to a JAK inhibitor, that patient is allowed on the clinical trials, irrespective of other prior treatments.

Our next question comes from the line of Andrew D'Silva with B. Riley.

Congrats on the progress. I'm sorry if you answered any of these. I was jumping between calls here. So I was just going through my notes, and not to delve too deep with already discussed topics, but I'm just trying to get a sense of how you see things playing out here given how encouraging the data has been. So I know low-risk is the overwhelming majority of MDS patients, and RS positive is around 10% of total MDS patients. But like what percent of low-risk MDS patients have 5G syndrome and/or refractory to ESAs but are also RS positive? And then I have just a follow-up question to that.

I need to clarify something. Only 5% of the patients are del 5Q positive, while about 70% are RS positive, which is significant. To correct myself, it's 5% of the patients that are del 5Q positive in our study, which is focused on non-del 5Q positive patients. I wanted to make that clear. Additionally, our study and current efficacy data demonstrate that we can achieve transfusion independence and improve healthcare outcomes for both RS positive and RS negative patients. Could you please repeat your question? What exactly were you asking?

I was just trying to get a sense of the RS positive patient breakout within your specific patient population criteria. I know it's a small percent of the overall population for MDS, but what part of the population is it in your specific low-risk population that you're targeting for your Phase III trial?

We are going to enroll patients irrespective of the RS status. I think that's the key to understand, right? So it doesn't matter whether you're RS positive or RS negative. You can be enrolled in the imetelstat Phase III study.

Olivia, I think you had a comment.

I think, Andy, I think your question is from what percentage of low-risk MDS patients are RS positive.

Correct. Also within your specific criteria for enrollment.

Well, I think what Aleksandra was trying to convey is that there is no criteria to exclude or include based on RS positive or negative status because we are allowing both to participate. So, regardless of whether you're RS positive or RS negative, you are eligible for our trial. This is in contrast to other trials or agents; for example, the most recent drug approved for low-risk MDS focused solely on RS positive patients.

Right. So really, the thing I was trying to get at was, even though they have received approval, you did have amazing transfusion independence and healthcare improvements relative to them when you look back at the Phase II data that you presented recently. I was just trying to figure out, did you really think that it will be a hindrance in you being able to enroll RS positive patients because the RS positive population in the Phase II study actually did, I think, better. And so just the data that came out would lead me to think that you'd still be able to enroll a pretty hefty amount of RS positive patients.

Right. Let me take that, Andy. So I think our view is that the RS positive patients make up a minority but nevertheless, an important minority of patients who have low-risk MDS. As we've said numerous times now, we are not inhibited in enrolling either RS positive or RS negative patients. With regard to the availability of patients for the clinical trial, I think that we are very likely to see a distribution of patients, plenty of whom will have RS positivity because we seem to have a better profile than some other products in high transfusion burden patients. So I think that we're not anticipating a major issue in that regard.

Okay. That's great to hear. Perfect. And just my last question, as it relates to the 40 new sites. Since these are all post-COVID sites that are coming up, could you let me know what kind of differences are taking place as far as discussions or what they need to happen before they feel comfortable actually joining the trial?

I'm not sure Aleksandra's suffering a little bit from IT challenges post-hurricane. She's on the East Coast. Aleks, are you back online there?

Yes, I'm here. Can you hear me?

Okay. Great. So did you hear Andy's question?

I did. I did. I mean the new sites that we are adding on the study, we're really approaching them with the new data that we have, showing the durability and the high transfusion dependence rate. So honestly, I don't think that there is any additional requirement. As I said, the new data has generated enthusiasm across the medical community. And we've added the sites, and we are expecting most of them, if not all, to be open for clinical enrollment by the end of the year.

Your next question comes from the line of Tom Shrader with BTIG.

Just one question. At each KOL event, John Mascarenhas invariably goes on and on about how high your burden is for JAK failure and it makes patients hard to enroll. Given you've got OS as an endpoint and JAK inhibitors have a very modest OS benefit. Do you think you can relax that partly relevant to the previous question about how many things there are competing for MF patients now? Just your thoughts, does OS free you up a little bit there?

Yes. I can take that. I mean I don't know, it's an interesting way to put the question, Tom. I don't believe we are experiencing or we will be experiencing difficulties based on the study criteria. Just one point to remember is that when the Imbark study started, it was five years ago, there were no studies in relapsed/refractory patients. It was kind of really paving the way for this definition of relapsed/refractory patients, which has been evolving over time. I believe that nowadays, the MS community, the MS treating community is used to these criteria. They understand that it is needed for the conduct of a trial. And therefore, I don't think that would cause difficulties in enrollment. In addition to that, as you say, I mean overall survival is the golden endpoint or the golden outcome that everybody would expect from clinical trials. So that certainly creates enthusiasm, and we believe will be driving interest and enrollment on the study. I don't know, Chip, if you have anything to add to this.

Yes, I do. From a technical standpoint, I believe the field is progressing in the direction we're pursuing. Essentially, we're requiring patients to undergo a specific number of months of ruxolitinib treatment, followed by at least two months of stable rux levels to ensure they have had a sufficient trial with a JAK inhibitor. If they then meet the criteria for being refractory, they qualify for the study. I see this in some other protocols as well that are coming out, probably because it's a relatively small KOL group that promulgates a very tight inclusion criteria and exclusion criteria for these types of studies. So I don't think we're really at a disadvantage there. I think we will be at a big advantage when it comes time to looking at the data because I think we'll have patients who really did get into the study only if they were truly refractory, and that will obviously heighten the difference, as we hope, between active treatment and BAT treatment. So I don't think if I got your question or not.

There are no further questions at this time. I will now turn the call back over to Dr. Scarlett.

Well, I'd like to thank once again all of our covering analysts, their colleagues and their banks. And I'd also like to thank our recent investors in the company. We appreciate very deeply the show of support and enthusiasm, as mentioned before, and our very, very hard-working community of investigators, study site coordinators and, of course, our own internal employees. COVID is a challenge, but interestingly, I think we're finding ways around many of these issues, and we feel good, as commented on more directly in the previous comments about going forward. So I'd like to thank everybody for that effort and thank everybody for joining the call today. I think we'll wind off with that. Thanks. Bye-bye.

Thank you, ladies and gentlemen. That does conclude today's conference call. You may now disconnect.