Suzanne Messere - Investor Relations Dr. John Scarlett - President and CEO Olivia Bloom - Chief Financial Officer.

George Zavoico - B. Riley FBR Michael Kay - Kay Associates Chad Messer - Needham and Company.

Good day, ladies and gentlemen. And welcome to the Geron Second Quarter 2018 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. As a reminder, this call maybe recorded.

I would now like to introduce your host for today’s conference, Ms. Suzanne Messere. Ma’am, you may begin..

Thank you, Skyler, and good afternoon, everyone. Thank you for joining us today for Geron’s second quarter 2018 conference call. I’m 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 second quarter financial press release issued earlier today on our website under www.geron.com/investors. On today’s call, management will share financial results from the quarter, review recent company events and then we will open it up for questions.

A live webcast of the call is 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 are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

These include, without limitations, statements regarding, the expectations, plans, timelines and prospects for the IMbark and IMerge clinical trials, including the Janssen is expected to make it’s Janssen continuation decision by the end of the third quarter of 2018, that Geron would be able to initiate a clinical trial in MDS in the first half of 2019, potential financial payments to Geron under the Janssen collaboration agreement 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 the imetelstat data shows successful safety and efficacy in both IMbark and IMerge whether Janssen decides to continue developing imetelstat on the terms in the collaboration and license agreement.

And if so, informs Geron, by the end of the third quarter 2018, and whether the FDA or other health authorities require that IMbark and/or IMerge be delayed or discontinued.

Additional relevant detailed 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 June 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?.

Thanks, Suzanne. I would like to welcome everyone to our second-quarter conference call.

By way of an overview since our last update, which we gave at our annual meeting in May, we’ve strengthened our balance sheet and made progress on our plans to address either scenario resulting from Janssen’s upcoming decision whether to continue imetelstat development, which we continue to expect by the end of the third quarter.

As a result, we’re confident in our ability to manage our business effectively going forward. I’ll get into specifics on these points later on the call. Now I’d like to turn the call over to Olivia, our CFO, who will provide details on our financial results..

Thank you, Chip, and good afternoon, everyone. For the second quarter of 2018, we reported a net loss of $6.9 million or $0.04 per share, compared to $6.4 million or $0.04 per share for the comparable 2017 period.

Net loss for the six months ended June 30, 2018 was $14.1 million or $0.08 per share, compared to $13.6 million or $0.09 per share for the comparable 2017 period. Revenues for the three months and six months ended June 30, 2018, were $208,000 and $526,000, respectively, compared to $174,000 and $711,000 for the comparable 2017 period.

Revenues for the three months and six months ended June 30, 2018 and 2017, included royalty and license revenues under various non-imetelstat license agreement.

With the adoption of the new revenue recognition accounting standard as of January 1, 2018, using the modified retrospective transition method, revenues for the three months and six months ended June 30, 2018 are presented under the new accounting standard but 2017 amount continue to be reported under accounting standards used historically, which causes a lack of comparability to the prior periods presented.

Therefore the decrease in revenues for the six months ended June 30, 2018, compared to the same period in 2017 reflects not only a reduction in the number of active non-imetelstat license agreements and decreased product sales from license fees, but also a change in the counting method.

We do not expect the adoption of the new revenue recognition accounting standard to have a material impact on our financial statement on an ongoing basis.

Research and development expenses for the three months and six months ended June 30, 2018, were $3.2 million and $5.6 million, respectively, compared to $2.5 million and $5.9 million for the comparable 2017 period.

The changes in research and development expenses for the three months and six months ended June 30, 2018, compared to the same period in 2017, primarily reflects the variability in costs for our proportionate share of clinical development expenses under the imetelstat collaboration with Janssen.

General and administrative expenses for the three months and six months ended June 30, 2018, were $4.2 million and $9.6 million, respectively, compared to $4.4 million and $9.1 million for the comparable 2017 period.

The overall increase in general and administrative expenses for the six months ended June 30, 2018, compared to the same period in 2017, primarily reflects the net results of higher legal and consulting costs, partially offset by lower stock-based compensation expense.

Interest and other income for the three months and six months ended June 30, 2018, was $717,000 and $1.1 million, respectively, compared to $346,000 and $678,000 for the comparable 2017 period.

The increase in interest and other income for the three months and six months ended June 30, 2018, compared to the same period in 2017, primarily reflects higher yields on the company’s increased marketable securities portfolio.

As Chip mentioned, we have strengthened our balance sheet, ending the second quarter with $181.4 million in cash and marketable securities. Since December 2017, we have raised cumulative net cash proceeds of approximately $87 million from sales of common stock under at market issuance sales agreements.

At this time we do not expect to raise additional capital head of Janssen’s decision. We expect these net cash proceeds to support the company under either scenario following Janssen’s decision.

In a scenario where Janssen elects to continue the collaboration, we expect the funds to support the future development of imetelstat, including potentially conducting one or more imetelstat independent development plan or IDPs, under the collaboration agreement and/or to support BD efforts, to in license or acquire other oncology products, programs or companies to diversify our business.

In a scenario where Janssen elects to discontinue the collaboration and the data for imetelstat warrant continue development, then we expect the funds to be used to support future development costs, including the potential start of Part 2 to Phase 3 portion of IMerge and lower risk MDS. And with that, I will turn the discussion back to Chip..

Thanks, Olivia. I’m going to first provide updates on the IMerge and IMbark trials. Then I’ll provide our thoughts of the components potentially influencing Janssen’s decision. I’ll finish with how we’ve been preparing to respond to each scenario once we’ve been informed of Janssen’s decision of whether they elect to continue development of imetelstat.

First, a few comments on IMerge and myelodysplastic syndrome or MDS. As you, IMerge is a two-part clinical trial evaluating imetelstat in transfusion dependent patients with low or intermediate one risk MDS, who are relapsed after or refractory to prior treatment with an erythropoiesis stimulating agent or ESA.

Part 1 of the IMerge is an open-label Phase 2 study. Part 2 is a double blind place controlled Phase 3 study that has not yet begun. The primary endpoint for both parts of IMerge is the rate or percentage of patients who achieved red blood cell transfusion independence or TI for at least an eight week period of time.

On June 17th of this year, updated data from Part 1 of IMerge were presented at the 23rd Annual Congress of the European Hematology Association or EHA, in Stockholm.

These updated data reflected a longer medium follow-up of 95 weeks as compared to the December 2017 presentation at the American Society of Hematology or ASH Annual Meeting at which time the follow-up was 66 weeks.

Because the original inclusion and exclusion criteria for IMerge did not restrict the number or type of other prior MDS treatments of patient received before entering the trial. Part 1 of IMerge originally enrolled a total of 32 patients who had a variety of prior treatments.

Among these original cohort of 32 patients, a subset of 13 patients had not received prior treatment with either hypomethylating agents or HMAs or lenalidomide and also did not have a del(5q) chromosomal abnormality. The EHA presentation showed that the eight-week TI response rate for the original 32 patient cohort was 34%.

This was a clinically meaningful outcome in comparison to the eight-week TI rate of 17% reported in the trials lower risk MDS patients after treatment with HMAs and 27% reported in the trial of non-del(5q) patients after treatment with lenalidomide.

For the 13 patient subset, the efficacy outcome for imetelstat was more impressive with an eight-week TI rate of 54%. These encouraging results suggested imetelstat could be positioned as a potential treatment after ESA failure and prior proceeding to treatment with an HMA or lenalidomide.

We believe this could represent a favorable commercial positioning since currently most patients with non-del(5q) lower risk MDS generally proceed from treatment with ESAs to treatment with either lenalidomide or HMAs.

In addition, imetelstat could offer much needed alternative for physicians and patients especially in the European Union where HMAs and lenalidomide are not approved for lower risk MDS.

In the fourth quarter 2017, Janssen expanded Part 1 of IMerge to enroll an additional 25 non-del(5q) lenalidomide and HMA treatment naïve patients, in order to increase the experience and confirm the benefit risk profile of imetelstat in this refined target population.

Next, IMbark and myelofibrosis or MF, as a reminder, IMbark is our Phase 2 trial in patients with intermediate two or high-risk MF, who have relapsed after or are refractory to prior treatment with JAK inhibitor.

In the second quarter of this year, Janssen initiated a protocol specified primary analysis, which includes an assessment of overall survival, using April 26th as a clinical cutoff date.

The timing of Janssen’s continuation decision is driven by the timing of the completion of the primary analysis of IMbark and we continue to expect their decision by the end of the third quarter. In their decision-making process, we believe that Janssen will consider the totality of the data from both clinical trials.

For IMbark, we expect Janssen to focus on projected median overall survival, because patients eligible for IMbark have few other treatment options.

Since IMbark does not have a control arm, the assessment of overall survival can only be contextualized by looking at overall survival from other trials with similar MF patient populations, who have failed or been refractory to JAK inhibitor treatment.

Janssen will make their own assessment, whether they believe there is an adequate improvement in overall survival to warrant further development of imetelstat in relapsed/refractory MF.

For IMerge, we expect Janssen’s analysis will focus on assessing whether the efficacy and safety outcomes from the additional cohort of 25 patients in the refined target patient population are consistent with the 13 patient subset, thus enabling them to move forward to part two, which is the Phase 3 portion of IMerge.

Beyond the data from the MF and MDS studies, we expect there will be other factors Janssen will consider. Such as the number in market potential for the indications they believe could likely be pursued with imetelstat.

The time and costs of future development and commercialization, their assessment of whether the terms of the collaboration agreement remain beneficial for them and factors not related to imetelstat but highly relevant to Janssen’s corporate portfolio strategy, which could include the number, rep and costs associated with other non-imetelstat development programs that are being pursued by Janssen in all of their therapeutic areas of focus.

In connection with Janssen’s decision-making, we expect to receive data package from Janssen, which will include information from the primary analysis of IMbark and preliminary results from the refined target population of IMerge, including the original 13-patient subset and the additional cohort of 25 patients recently enrolled.

We do not expect to provide any further comments on the contents or the timing of this data package prior to Janssen’s decision, except under certain circumstances.

For example, if the Joint Steering Committee, comprised of members of both Janssen and Geron, determines that the data do not support further development of imetelstat, then we would expect to disclose such a conclusion even prior to a Janssen decision.

We expect Janssen to submit data from both IMbark and IMerge, for presentation at future medical conferences. Therefore to maintain the customary medical conference embargo for such potential presentations, we do not anticipate data from either trial to be publicly presented before Janssen notifies us of their decision.

Now, let’s discus the plans we’ve been preparing that address either scenario resulting from Janssen’s upcoming decision. First, assuming they provide an affirmative continuation decision. I’ll describe our choices under the terms of our current collaboration and license agreement with Janssen.

Should Janssen decide to continue, they will provide a package of information that includes their future development plans and cost for imetelstat, as well as estimates for the timing of commercialization and related promotional activities, in order for us to decide -- to assist us in deciding whether to opt-in or opt-out according to the collaboration agreement.

Under the Geron opt-in scenario, we would receive a $65 million milestone payment for the affirmative continuation decision. The ratio of Geron to Janssen cost-sharing would be 20:80, respectively for future imetelstat U.S. development and promotional costs.

We would also be eligible for up to $470 million in development and regulatory milestones, and $350 million in sales milestones. The royalty tier percentage would be in the mid-teens to low 20s on potential future sales of imetelstat.

The joint governance structure would remain in place and continue to function in the same way it has since the beginning of the collaboration. In addition, we would have the opportunity to undertake independent development plans or IDPs for imetelstat, if agreed by the Joint Governance Committee.

Under the opt-out scenario, Janssen pays 100% of future imetelstat development and promotion costs, and in addition to the $65 million continuation milestone payment, we would receive an additional $70 million milestone payment for Janssen’s retention of full U.S. rights.

We would also be eligible for up to $415 million installment in regulatory milestones and $350 million in sales milestones. The royalty tier percentage would be double-digit to mid-teens on potential future sales of imetelstat.

In this scenario, governance of the future development program would be driven solely by Janssen and we would receive only periodic updates. We would not be able to conduct any IDPs. As a result, we would focus our attention on BD to diversify our business.

Our decision of whether we should opt-in or opt-out, would involve a financial analysis of Janssen’s proposed clinical development plan, as well as considering strategic impact on Geron.

Now, in contrast, should Janssen decide to discontinue imetelstat development and hand the rights to imetelstat back to Geron, and assuming the imetelstat data warrant continued development, we expect to initiate plans to move imetelstat forward.

From our perspective, we believe the imetelstat program has been de-risked by the collaboration with Janssen, as they have evaluated the drug in Phase 2 for both MDS and MF, which is when much of the de-risking of clinical development is done.

In addition to enhancing our understanding of imetelstat safety and efficacy profile in these two myeloid hematologic malignancy indications, we expect the data from IMerge and IMbark to give us a very good understanding of the initial dose in each indication, and the appropriate dose modification and this hold rules for the management of hematologic toxicities.

We also expect to understand what the pharmacokinetic profile is and how it affects target engagement in each indication, and how the drug performs with respect to a wide variety of secondary and exploratory endpoints, including genomic analysis.

In addition, we expect to gain further insights into the mechanism of action of the drug from a variety of in vitro and in vivo studies.

Under a hand back scenario, and assuming imetelstat data warrant continued development, we expect that our clinical development priority would be to initiate Part 2 of the Phase 3 portion of IMerge in the first half of 2019, after sponsorships of the R&D have been transferred back to Geron.

We believe that lower risk MDS presents a straightforward operational path to potential regulatory approval, because the Phase 3 portion of IMerge has already been designed, including the endpoints and a large number of the clinical sites have already been established, and are familiar with the clinical protocol from Part 1.

In addition, we engage internationally recognized one of the research firm to better understand the unmet medical need in lower risk MDS and how imetelstat could be used by physicians, given current and potential future treatments.

Also under hand back scenario and assuming imetelstat data warrant further development, we intend to discuss the results of the IMbark primary analysis with key opinion leaders in MF, as well as regulatory authorities.

We believe feedback from these discussions will provide important information on the scope and design of any potential future clinical trials for imetelstat, in the intermediate two or high-risk MF patients who are relapsed and refractory to a JAK inhibitor.

Our operational plan for the hand back scenario is being developed by a cross functional team, comprised of internal employees and technical consultants.

The teams planning objectives have been to identify and potentially select a global contract research organization or CRO, that would assume operational responsibility for the development plan, as well as to establish Geron’s capabilities in order to provide oversight of the CRO in all the key development areas, including, local clinical operations, regulatory affairs, CNMC [ph], pharmacovigilance, biostatistics and data management, and quality.

Of course, we would not enter into a long-term contract with the CRO, unless Janssen’s decides not to continue.

Despite our preparations, we expect the development of imetelstat to take longer in this scenario than it would, if Janssen continued, because of the time needed to transition all of the operational responsibilities for the imetelstat program back to Geron. In closing, we believe we’re as prepared as we can be ahead of the Janssen decision.

We’ve been focused on priorities that position us to support the potential advancement of imetelstat in either scenario. As a result, we’re confident in our ability to manage our business effectively going forward. So, we’d like to answer your questions and I’ll turn the call back to our operator..

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

Hi. Good afternoon, everyone. Hi, Chip. Hi, Olivia. Hi, Suzanne..

Hi..

Just basically two questions. The Phase 2 IMerge trial, the second cohort is still going and the follow-up was guided to be towards the end of the third quarter or fourth quarter for those actually 20 patients, if I’m not mistaken. And if the decision, sounds like the decision is going to be coming before that.

If so, I mean, if Janssen decides to continue, they’ll continue to the trial, but what if they don’t, would you keep going with those -- with that cohort, you think?.

Well, it kind of depends on what we see. We do expect to receive around the time of their decision or in advance of that evidence of how those patients have actually done and I think that we certainly would continue patients in that study if it looks like the data warranted it.

But I do think that we will have enough data from the original 13-patient subset and the additional cohort of the 25 patients actually going to end up being enrolled, that hopefully we would be able to make some decisions on our own part based on those data, but we….

Okay..

… do expect to get some of that data before they….

Okay..

… put out the decision..

And I noticed that your -- thank you for that. I noticed your legal and consulting fees are just a little bit lower, originally unchanged.

Is lot of that related to the upcoming Janssen decision? What -- can you provide any guidance as to what legal and consulting fees might be going forward?.

Are you referencing in G&A area?.

In the G&A area, yeah..

G&A, yeah, no, actually it relates to a number of other corporate activities. So, for example, as you know, we had a new equity in place this year to replace our old ones. So, there’s a lot of paper work surrounding that to put in a new equity plan in place, for example..

Okay. I was just going off the press release. You just said that it was due to higher legal and consulting fees. So, I guess, that is included that category then, I guess..

That’s correct..

I see. Okay. All right. That’s all for me. Thanks..

Got it..

[Operator Instructions] Our next question comes from Michael Kay with Kay Associates. Your line is now open..

Thank you very much. A few questions.

To this point, how much money has Janssen put into the project? And secondly, am I correct that Geron generally is just a one drug company? In other words, if it turns out that the imetelstat is not efficacious or safe or whatever, that will be the end of it? I mean, do you have any other irons in the fire or is everything depended upon the efficacy safety of this one drug?.

So, I’ll take the latter first and we can address your first comment if we can address it, we’ll do so afterwards. So, you’re quite correct, Michael. Geron has one major asset, which is imetelstat. And I think you’ve laid out the possible outcomes in a case in which the drug doesn’t go forward then it’s not a very happy of them for the company.

But we are dependent really on the one asset for the value of the company. I don’t know if we’re prepared to make any comments about Janssen’s..

We don’t actually have the information to be able to comment..

Yeah..

Okay. One -- well, I appreciate your candidness.

One more thing, if it turns out that Janssen elects to opt-out, then it wasn’t too clear, then will you try and get other major drug companies to take on the further development of the drug? Is that what you meant in terms of, if that scenario occurs?.

I don’t think the decision’s really been taken if -- I mean the major point is, we would take the product forward assuming the data warranted, right? So we would move forward with the product, and right now we feel as if the MDS area, again, depending on the data that we see.

But assuming that’s good, that looks very favorable for moving into the Phase 3 portion of IMerge study. So, I think that would be our first instinct.

What we would do after that at once we have retransferred the drug back in and what the strategic decisions would be, I think, we would wait until we finish that set of activities and then we’ll consider other strategic options, which would include, as you pointed out, the possibility of doing another out license, out license in part of the geographies, no out license in taking the drug forward entirely on our own and so forth..

Now, will that decision be made, I know it’s at the third quarter.

Would that be in any time within the third quarter or it means the date ending the third quarter?.

By the end of the third quarter..

Or by the end roughly so, it could be, that gives some leeway in terms of..

That’s correct..

Okay. Thank you very much..

You bet..

Our next question comes from Chad Messer with Needham and Company. Your line is now open..

Great. Good evening and thanks for taking my question. And thanks for that overview Chip, of sorting out the scenario analysis of what’s -- that was very helpful. With respect to lease time on and if the drug doesn’t look like helping anyone and warrants to take forward I believe, the last call you referred to that as an unhappy event..

Indeed..

We should agree there. Presumably though you still have a balance sheet to deploy and….

Yeah..

… in the past I know you’ve had -- you’ve been undertaking a search for assets on the side of all this for quite some time.

I just wondering if there’s any general comments that you could make about what that BD landscape looks like to you? Should you be back out there kind of comment through it?.

Sure. Well, I can give you a little bit of history, Chad. Where we ended up last year, we actually evaluated upwards of five different opportunities for platforms of even companies, and I mean, five companies in a very deep way.

However, we decided number of months ago that it was getting place enough for Janssen decision, that would make no sense to proceed with any of those transactions, whether any of those transactions would be available to us in the event that we wanted to react to them and whether they would still meet our criteria, I can’t comment on today.

That’s total too forward looking. But I think what we can say is that there are interesting opportunities and as you quite rightly point out we do have a fairly healthy balance sheet that would allow us to go and look for some, I would hope, very attractive properties.

But I don’t know, I can’t say anything more specifically about what we would do in that event. But thanks for bringing that..

No. Very helpful. And just to hope and we’re looking at one of the other scenarios..

Exactly..

This does end the Q&A session. I’d like to turn the call back over to Dr. Scarlett for closing remarks..

Well, thanks for joining the call today, everybody. We do expect that the next time we speak with you will be after the Janssen decision has been made. And so, I’m personally looking forward to that moment very much. It’s been quite a long story here and I think we’re looking for the clarity that comes with that. Thanks..

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