ImetelChat

The following was posted on Facebook @ Imet 33:
Greg E.
5/18/16
Two other Shareholders and I were able to talk with Dr. Scarlett briefly after the Annual Meeting. As the meeting was now over, Dr. Scarlett said that he would answers questions at this time only if he felt he could.
I asked him if he could reassure shareholders that Geron intended to let the Imetelstat story play out before considering a buyout offer. His answer began by saying that Geron management is always looking to maximize shareholder value and any deal would be analyzed in that light. He went on to say that companies in their industry had to take their "fairness" responsibilities very seriously,- that there were legally binding rules in place to prevent selling out at unreasonably low prices given the non-public data managements have available. I then asked him if JNJ had always acted towards Geron in accord with a philosophy I’ve heard JNJ officials state from time to time- that they are only interested in making offers for biotechs that want to be acquired. All he said in response to this line of questioning was that in their industry “sharpshooters” attempting hostile takeovers were extremely rare outside of the niche of specialty pharmacy. I then mentioned that at an earlier investor conference he had said in the context of talking about other acquisitions that he thought the NPV of Imetelstat was "hard to beat" and that even though I have far less information than he does because he is driving the car and I’m only along for the ride I perform my own NPV estimations and that the one thing I was confident mine showed conclusively (Note to readers: Hoosier’s articles provide the framework for my calculations and some of my calculations are discussed in comments to his articles) is that approval for second line MF alone would result in the NPV of Imetelstat being many multiples of the current market cap of Geron and that this was why I wanted to see the story of Imetelstat play out on its own. He nodded and said that frequently in their industry, a company without a drug on the market has a great opportunity to expand once they gain their first approval, because then they have the financial resources to fund development.
I knew I could have his attention only for a moment longer, because the other two shareholders wanted to ask questions as well, and Dr. Scarlett had a board meeting to get to. So I said I have one question remaining that I think is a really interesting question and asked if he'd answer one more, and he said smiling and raising his index finger,- "yes, one more" and then I asked him a question Hoosier had suggested I ask: was Geron giving full consideration to existing Geron assets residing outside the collaboration agreement that may afford organic diversification and growth opportunities? Here I can quote his answer word for word: "We are not in a position to comment about that today."
He then moved on to questions from the other two people I was standing with. I don't remember the exact questions- I was writing a few notes about his answers to my questions as I listened, but the interesting point I want to share about his answer to their questions was one of the shareholders asked about the NSCLC paper that came out May 12th and if there were many other similar initiatives ongoing, to which Dr. Scarlett said there were, and then he said as if to wrap up his earlier answer to me about NPV, and I'm paraphrasing his answer here except for the words in quotes, that things like these studies will yield data that will lead to very interesting, complex, and even difficult decisions down the road “if the company has success with one or both of the current trials, IMbark and IMerge.” This answer really put a bow on his earlier answer to me- I believe they feel all the interesting pre-clinical data they have only becomes actionable once resources are available- which commercialization in either or both MF or MDS would make possible.
Taking the recorded portion of the meeting and the informal part after it that I’ve tried to relate here together, my key takeaway is that they believe the potential of the company can begin to be unlocked by at least getting to what Dr. Scarlett described in the Q&A as “2nd Base”- that being positive results from at least one of the two trials. I think they feel they have a lot of initiatives that become actionable once it is clear Imetelstat is going to take the next step beyond the current trials in MF or MDS. Based on Dr. Scarlett’s repeated returning to the subject of what is possible if either of the current trials are successful, and his responses to my questions after the meeting about a buyout, taken with his comment at a previous investor conference that Imetelstat’s NPV is “hard to beat,” I am confident they won’t consider selling for a price that does not reflect a very high NPV for Imetelstat should the data from either of the current trials prove positive.

Thanks, hiprock. That is very interesting information! This strategy I can follow and support. With the current cash and milestone payments Geron is able to fund the organization and the costs of the trials. After approval real money will come in and the big play can start. In this light we can clearly see that the current primary end points of IMbark and IMerge have been choosen very strategically (spleen response and transfusion independence, instead of resolution of BM fibrosis and allelic burden). It seems that Dr. Scarlet's intention is to first let Geron's value grow before any BO.

Greg is member of this forum. Let's hope we can have some more discussion about this with him here.

Here is Leviek's (SA) reply to Greg's report of the Annual Meeting:

"../.. Your questions were outstanding and I have to credit you with being so specific as to get this response, "We are not in a position to comment about that today." Anyone here who thinks there are no catalysts is not paying attention. It took only 4 years for Janssen to roll out 15 separate trials for Imbruvica, a drug that does not have the platform potential of Imetelstat, in my opinion.
Today, JNJ's new collaboration seems to point to attempts at furthering combinations that may be used to slow solid tumor growth, maybe to be used eventually with Imetelstat. There will be others.
I think we've all underestimated Geron's patent potential, not only in Imet, which got them the collaboration, but in advancement of, and furthering, future collaborations in oncology. Just because they don't have a lab, it does not mean they can't use their patents to grow. Geron may have some of the best patents in the business, and they know it.
I also like the response about selling out. A little while back we were talking openly about JNJ stealing Geron at a time they knew the drugs were working. This can't happen because it would turn into a fiasco for them. Geron stockholders would sue JNJ directly for having inside information and using it. Scarlett also said it would be difficult, if not impossible to raid the company. THIS is our biggest risk and he put my mind at ease with his response. One successful result would put a potential market cap on Geron several times the current one, even if stockholders were unaware of the results. Scarlett and JNJ could not make a deal with insider knowledge that was not shared to stockholders."

Thanks Hiprock & Fisher for sharing these quality posts

Thanks for the nice comments- and for bringing my Annual Report post over here. In thinking the experience over the last few days, I really think Dr. Scarlett's answer to a question in the taped Q&A answer session that they need to get to "2nd Base" first was purposeful. He clarified that right away to mean having success in one of the two ongoing trials. Being deliberate and determined not to jump the gun is a different thing than laying back. My experience of the Annual Meeting, in its totality, including the discussion afterwards I described, lead me to believe they are fully aware of the implications for the NPV of Imetelstat if success is achieved in either trial, and they are very confident that can take this a long way if they have success in either trial.

Hi Greg,

Thanks for your comment. My take is that Geron is focused on preparing the next move for when they arrive at the second base (i.e. imet approval). That is all very delicate, as they have to secure the current process with JNJ in order to get to this second base. At the same time they have to work out various strategies and scenario's; plan B, C, D and E if you will (with JNJ, without JNJ, in parallel with JNJ, other partnerships etc.). But the stakes are extremely high from all sides (scientific, financial, commercial, legal), so they can't reveal a single bit of any of their plans at this stage. The next scenario must be clear first. At the same time, they need to keep the JNJ relationship go smoothly and with maximum of trust and energy. It is a huge ballancing act, not for the faint harted.

My assumption here is that 'success in one of the two trials' means approval of imetelstat. But if JNJ decides to continue the cooperation before that, Geron may get more freedom to move forward. But even then it will be unlikely that further stratgies will be disclosed before approval. JNJ and Geron may keep their joint strategy for themselves until they are the second base, all be it to keep the competition in the dark. I think Dr.Scarlet sometimes even will need to take back doors to enter his meetings in order not to be spotted.

Btw: this doesn't mean that there won't be any catalizing events before they get to the second base. Positive readouts, continuation decission, start of AML, some kind of fast track designation etc., this all can suddenly boost the dynamics.

This is what Dr/Scarlett said at the Annual Meeting about 1st and 2nd base:

“The challenge though, is that we have to get to first base, or at least second base. And second base in this case would be having some positive readouts from these studies. So I think that’s the first thing that really needs to happen. After that we’ll be in a better position to make assessments about competitive landscapes.”

You can hear this at 52:03 of the recording. So second base will be earlier than anticipated approval in 2018.