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Geron Corporation (Delaware) (NASDAQ:GERN)
Q3 2019 Earnings Call
Nov 8, 2019, 3:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen thank you for standing by and welcome to the Third Quarter 2019 Geron Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today Suzanne Messere. Please go ahead.

Suzanne Messere -- Head of Investor Relation and Corporate Communications

Thank you Lisa and good morning everyone. Thank you for joining us for our third quarter conference call. I am joined today by Dr. John Scarlett Geron's Chairman and Chief Executive Officer; Olivia Bloom the company's CFO; and Dr. Aleksandra Rizo our Chief Medical Officer. After the market closed yesterday we announced our third quarter 2019 financial results via press release and is available on our website under www.geron.com/investors. This morning management will discuss information from yesterday's press release. 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 this presentation and question-and-answer session contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements include any of the company's plans expectations timelines believes statements of potentiality and projections and without limitation those regarding that the top line results from the Phase III portion of IMerge are expected to be available by midyear 2022 that there will be an end of Phase II meeting with the FDA by the end of first quarter 2020 that Geron may potentially develop telaprevir relapsed/refractory MF patients and that Geron's 2019 operating expenses will be $80 million to $85 million.

All of these 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 locations those regarding that the company may be unable to overcome all the clinical safety efficacy technical scientific operational manufacturing and regulatory challenges to enable the top line results from the Phase III portion of IMerge to be available by midyear 2022. The regulatory authorities may not comment the further development of imetelstat on a timely basis or at all. That the company may decide not to develop Intelsat for relapsed/refractory MF patients and that there may be unexpected operating expenses or event that caused the $80 million to $85 million 2019 financial guidance to be revised. Detailed information on the votes and uncertainties and additional risks uncertainties and factors that could cause actual results to differ materially from those in the forward-looking statements are into the heading Risk factors in Geron's quarterly report on Form 10-Q for the quarter ended September 30 2019 filed with the SEC. 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 churn disclaims any obligation to update these forward-looking statements to reflect future information events or circumstances.

With that I'd like to turn the call over to Dr. John Scarlett Jaren's Chairman and CEO. Chip?

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

Thanks Suzanne and good morning everyone. Geron continues to execute on its key 2019 imetelstat development plans with the achievement of several important milestones this past quarter. We assume full control of all development critical step by completing the transition of the program back into your own from chance and at the end of the third quarter. This means that in addition to the US, we're going The sponsor for both immersion in all countries where the trials are being conducted. In August, we opened the phase three emerge trial for screening. In October, we announced the first patient and dose. Or recently in September, we announced that the FDA granted Fast Track presentation in Intelsat the treatment of adult patients with intermediate to or high risk qualify versus diseases relapsed after or is refractory to track. This is the same patient population of the study in Geron IMbark Phase II clinical trial.

With no marketed drug specifically approved for relapsed/refractory MF there's a significant unmet medical need for this indication. FDA's Fast Track program is designed to facilitate the development and expedite the review of new drugs that are intended to treat serious conditions and that are supported by data that demonstrate the potential to address an unmet medical need. We do the past track designation positively as it provides opportunities for frequent interactions with the FCA. This section is reg application on a rolling basis and eligibility to request priority review. on the call today, Olivia will review our three quarter financial results and expectations around future development costs. Thanks to Alexander will comment on the abstracts published yesterday morning for the upcoming American Society of ology, annual meeting that will be held in December and the current status of the Phase III merge trial. After that I'll sum up the call with you.

So I'd like to turn the call over to Olivia our CFO who will review financial results for the third quarter.

Olivia K. Bloom -- Chief Financial Officer, Executive Vice President-Finance, Treasurer

Thank you Chip and good morning everyone. For the third quarter of 2019 we reported a net loss of $15.2 million or $0.08 per share compared to $5.6 million or $0.03 per share for the third quarter in 2018. Net loss for the first nine months of 2019 was $39.5 million or $0.21 per share compared to $19.7 million or $0.11 per share for the first nine months of 2018. Revenues for the three and nine months ended September 30 2019 were $131000 and $289000 respectively compared to $165000 and $691000 for the same period in 2018. Revenues for the three and nine months ended September 30 2019 and 2018 including royalty and license fee revenues under various non-imetelstat license events The decline in revenue reflects a reduction in the number of active research license agreements in 2019 related to the company's reverse transcript or technology as a result of patent expiration on the underlying technology. Total operating expenses for the three and nine months ended September 30 2019 were $16.1 million and $42.8 million respectively compared to $7 million and $22.2 million for the comparable 2018 period. Research and development expenses for the three and nine months ended September 30 2019 were $11.1 million and $27.1 million respectively compared to $2.7 million and $8.4 million for the same period in 2018.

The increase in research and development expenses compared to the same period in 2018 primarily reflects costs for the transition of the imetelstat program including resuming sponsorship of the ongoing imetelstat clinical trials; expenses for start-up activities for the Phase III trial and higher personnel-related costs for expanding development. General and administrative expenses for the three and nine months ended September 30 2019 or $5 million and $15.6 million, respectively compared to $4.3 million and 13.8 million dollars for the same periods in 2018. The increase in general and administrative expenses compared to the same period in 2018. Our rally reflects higher corporate and legal costs, and increase personnel related expenses for additional headcount to support the development organization, interest and other income for the dream nine months into September 30 2019 or $1 million and $3.3 million, respectively, compared to $1.1 million and $2.2 million for the comparable 2018 period. The overall increase in interest and other income in 2019 compared to the same period in 2018 primarily reflects higher yields on our increase marketable securities portfolio. We ended the third quarter of 2019 with $159.3 million in cash and marketable securities. Since May 2019 we have raised cumulative net cash proceeds of approximately $19.3 million.

From the sales of an aggregate of 13214867 shares of common stock under an ad market issuance sales agreement. After deducting sales commissions and other offering expenses payable by apps. We expect these net cash proceeds to provide additional financial flexibility as we advance the imetelstat development program. The funds will support future development costs including the IMerge Phase III trial. As Chip mentioned we completed the transition of the imetelstat program from at the end of the third quarter of 2019. Last quarter in June we signed a clinical supply agreement with Janssen to purchase certain inventories of drug product drug substance and raw materials for imetelstat manufacturing. Under the supply agreement we will pay $7.5 million for drug product upon shipment of the product to our specified drug storage and distribution centers. We have also agreed to pay up to approximately $6.7 million for drug substance and raw materials upon testing and confirmation such materials meet certain specifications. We are not obligated to purchase materials that do not have testing and conform to our quality specifications.

We expect delivery of materials under the supply agreement and any testing to be completed by the end of December 2019 upon which we will recognize the associated expenses in accordance with the accrual method of counting. We expect cash payments to Janssen for the materials to occur in the first quarter of 2020. As such we are reaffirming our 2019 guidance and continue to expect total operating expenses to range from $80 million to $85 million of which approximately $20 million to $25 million represents onetime costs that includes imetelstat program transition activity from Janssen to Geron. And purchases of materials to supply the IMErge Phase III trial and prepare for new drug manufacturing. As you know we began the year with approximately $183 million in cash and marketable securities. We estimate our year-end cash and marketable securities to be approximately $145 million to $150 million. This projection includes our 2019 operating expense guidance adding back certain liabilities that will be paid in 2020 such as the purchase of Jansen Materials interest income to be earned in 2019 and the $19.3 million in net cash proceeds raised under the ATM program. As of October 31 Geron has 42 employees and plans to grow to a total of approximately 45 to 50 employees by year-end 2019 of whom half will be research and development personnel.

With that I will turn the discussion to Aleksandra.

Aleksandra Rizo -- Executive Vice President and Chief Medical Officer

Thanks Olivia. This poster as presentations at the ASH Annual Meeting to be held in December. The abstract can be found on the ASH website at www.mentalissue.org. Let me start with the abstracts reporting data from nonclinical leverage experiments on the potential effects of combining imetelstat and on malignant myeloid fibrosis or MS cells. is the first drug approved for the treatment of myelofibrosis and until recently was the only drug. The 2 sets of nonclinical experiments described in this abstract explore the hypothesis that the combination of imetelstat and might create a treatment regimen format. This could be more efficacious than using either drug alone. In the first set of experiments screen cells from MS patients and blood cells from healthy individuals each containing and prognoses cells were growing in a tissue culture lab and were treated with 1 of 4 regimens: Imetelstat alone for so many cities alone a combination of and imetelstat given simultaneously; and a combination of and imetelstat given sequentially. In the second set of experiments mice were transplanted with either MS free cells or normal blood cells and then treated with 1 of the 4 regimens as used in the first step experiments.

In both set of experiments the sequential treatment of followed by imetelstat resulted in significant reductions in the numbers and the functions of the malignant and cells originating from the MS compared to either treatment alone for the simultaneous treatment regimen. Furthermore in both set of experience the sequential treatment regimen did not affect the U.S. appointed and cells originating from the normal blood cells. The results from these experiments provide a potential additional of the imetelstat in treatment MS. Because the complexities involved with combining 2 therapies we overlap it has not been explored. Further research would be needed to determine the appropriate dose and schedule of the combination treatment before we could decide to pursue this as a potential treatment regimen for net In the meantime singe-agent activity in various hematologic malignancies. We then intend to prioritize our efforts on advancing imetelstat as an individual treatment regimens. The second abstract accepted for ASH was in a new category called trials in progress. Abstracts for this category described innovative clinical trials that have not reached their primary endpoint to provide opportunities for early engagement and collaboration among translational Pinnacle and industry investigators speciation and regulators.

In addition abstracts in this category enhances the visibility of ongoing clinical trials to pursue a patient recruitment. We are pleased that the Phase III IMerge trial has been included in these new categories and details of the trial design to be presented in a poster. Many aspects of the Phase III trial design including the primary and secondary endpoint the target patient population and the dose and schedule administration remain consistent with the Phase II portion of the trial. In addition to the presentation of the 2 abstracts. We also look forward to the upcoming ASH Annual Meeting and corresponding 3 additional Symposia and we'll have the opportunity to connect to the investigators and PLS will be actively involved in patient recruitment and enrollment. With regard to the phase of IMerge trial start-up activities we have recently hosted 2 meetings 1 in U.S. and 1 in Europe for investigators and participating site personnel. The recession of these meetings have been very cost. The first patient was dosed in October and approximately 30% of the sites are open for enrollment. At this stage of the trial it is too early to determine what the enrollment dynamics will be just less than 50% of the sites are open and many of the signs that are expected to be high rollers particularly in Europe has yet to be opened. We expect to have a better sense of enrollment dynamics by the end of the first quarter of 2020. Going forward we plan to provide qualitative updates on enrollment during our quarterly conference calls. We will expect to announce when half of the patients have been involved in the trial and when the trial is fully enrolled. Based upon our current planning assumptions we continue to expect top line results by midyear 2022.

And now I'll turn the discussion back to Chip.

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

Thanks Aleksandra. Moving on to MF. As discussed previously we're currently in the process of preparing to conduct an end of Phase II meeting with the FDA by the end of the first quarter of 2020 and will subsequently announce our decision regarding any potential future late-stage development plans for relapsed/refractory MF. This decision will be influenced by among other things the nature of our discussions with the FDA by our assessment of what would be required to achieve clinical and regulatory success in this indication including the cost and duration of any potential clinical trials required for regulatory approvals in the United States and European Union. So in summary we're a much different company today than we were a year ago.

We continue to make great progress in 2019 from building a solid foundation of in-house expertise in hematology/oncology and in late-stage development. 2 dosing the first patient in the Phase III IMerge clinical trial. We're focused on opening sites to enable patient recruitment and enrollment for the Phase III and I'm preparing for the end of Phase II meeting with the FDA on relapse/refractory MF. All of the development activities completed to date plan for the future support the element of imetelstat as a potential treatment to address unmet medical needs in myeloid We look forward to the remainder of this pivotal year as we continue to execute on our 2019 development plans. We believe our accomplishments will translate into shareholder value over the long term.

So with that we're now happy to answer your questions and we'll turn the call back to the operator.

Questions and Answers:

Operator

[Operator Instructions] And our first question comes from the line of Charles Duncan from Cantor Fitzgerald. your line is open.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Good morning. This is Pete Veropoulos on for Charles. One question regarding -- so we have a potential approval of luspatercept and I was wondering whether you think you may have a difficulty enrolling RS-positive patients into the study given that the physicians make serum toward an approved drug. If so how do you think that may affect the overall study timeline? And would you considering patients that relapse or extracted into the IMerge study.

Olivia K. Bloom -- Chief Financial Officer, Executive Vice President-Finance, Treasurer

I'm happy to Andrew I'll take that question. So I mean as we just mentioned right verification and enrollment and we expect to be pretty far along in the enrolled in process by the time of the PDUFA date for those prototypes and that we fall with the approval in Europe during the second half of 2020. So we would expect to be close to completing enrollment by that time. And based upon what we know today we believe that it is unlikely that a potential approval of Paretta to impact our enrollment time line.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Okay. And for the abstracts for ASH you're going to send nonclinical data for the regimen of sequential treatment of a JAK inhibitor with imetelstat. So is there a possibility of adding an MF in the study for this treatment regimen. And you think it's going to be one of the list of products with the FDA at the end of Phase II meeting.

Olivia K. Bloom -- Chief Financial Officer, Executive Vice President-Finance, Treasurer

As I mentioned right more work would need to begin to pursue a clinical study with the combination as that would include careful exploration of the overlapping toxicity between the 2 drugs. At the moment our resources and batteries are focused on advancing imetelstat as single-agent treatment such as the IMerge Phase III clinical trial And also we work hard on determining the potential regulatory path. For the restoratory MF. But we believe at the moment it should stay our focus.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Okay. And can you speculate as to why sequential dosing rather than simultaneous dosing. Maybe have a greater reduction in MS commitment to scales and regeneratives.

Aleksandra Rizo -- Executive Vice President and Chief Medical Officer

Right. Yes. So we -- yes I can give you some flavor of that. And as you might know Omahas been reported to be a DNA damaging agent and north and antithetic agent. So with the experiments with the sequential treatment. What happens is that you first induced DNA damage into these MSMEs. And after that you induce anti apoptotic therefore the therefore the combination has an attitude or that effect or synergistic effect if you will on the malignant cells.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Thank you very much in regards on progress over the quarter.

Operator

Our next question comes from the line of Tom Shrader from BTIG. Your line is open.

Kaveri Pohlman -- BTIG -- Analyst

Hi, This is Kaveri for Tom. I just have one on IMerge. Could there be any incremental data from the Phase II trial between now and when we first expect data from the Phase III study?

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

In other words any kind of interim analysis or any kind of other data is that the question? Or did I miss that?

Olivia K. Bloom -- Chief Financial Officer, Executive Vice President-Finance, Treasurer

I think she asking whether we'll have any follow-up data from the Phase II portion of IMerge in the future. .

Aleksandra Rizo -- Executive Vice President and Chief Medical Officer

At the moment we do not plan to have that at least not at the next ash or conference. We will look at the data to the bold and we'll let you know in a change.

Kaveri Pohlman -- BTIG -- Analyst

Thank you.

Operator

And our next question comes from the line of Gil Blum from Needham & Company. your line is open.

Gil Blum -- Needham & Company. -- Equity Research Analyst

Everyone, thanks for taking my question. Just a quick one about modeling. I just want to make sure I understood. So we expect a pretty significant tick up on Q4 R&D expenses. Is that a good way to look at this.

Olivia K. Bloom -- Chief Financial Officer, Executive Vice President-Finance, Treasurer

Yes Gill. As you probably have seen through the year there has been a steady increase in the ninth R&D and G&A expense. Especially R&D obviously for the start-up activities for the Phase III as well as the hiring of individuals into the development team. All right. But my question is more of -- am I expecting a very significant increase mostly in the fourth quarter to be almost like a one-off investment. And that's as a result as I mentioned about the purchases of the supply materials that are coming from Janssen. But if you add the 2 together that's almost $14 million. And because we expect the delivery and the testing activities to be completed by the end of the year. I need to accrue them for accounting purposes and those expenses may hit in 2019 even though the cash will hit the cash outlay will not hit until the following quarter.

Gil Blum -- Needham & Company. -- Equity Research Analyst

Got you. That helps. And just one more about ASH. But it seems like we're going to get a pretty exciting ASH for myelofibrosis we're getting some from constellation. I understand and there's more data coming out of But do you guys think maybe relapsed/refractory myelofibrosis is getting kind of highlighted in this upcoming ASH?

Aleksandra Rizo -- Executive Vice President and Chief Medical Officer

I think it's always a good news for patients to have you and data for potential new drugs available for them. I mean the -- you're right right? There are a few abstracts that are both in online and U.S. refractory event. The drive clearly continues to show clinical benefit however you analyze the data. Again has a different mechanism of action than addressing you. So that's where we stay focused and differentiate. In terms of the Constellation data that is being reported as you mentioned. Again both Dayton Frontline and relapse/refractory MS just as an observation right that the data is in treating and it's early. And it remains to be seen how the data will mature. So yes I mean it's good as for myelofibrosis as you say.

Gil Blum -- Needham & Company. -- Equity Research Analyst

Excellent. Thank you for taking my questions, and congratulations on progress in the score.

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

Thanks very much.

Operator

[Operator Instructions] And this ends the Q&A session. I will turn the call over to Dr. John Scarlett for closing remarks.

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

Thanks everybody for joining us today. look forward to bringing continued progress as we go forward here. Have a good day. Bye.

Operator

Ladies and gentlemen this concludes today's conference call. Thank you for participating. You may now disconnect.

Ladies and gentlemen thank you for standing by and welcome to the Third Quarter 2019 Geron Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today Suzanne Messere. Please go ahead.

Suzanne Messere -- Head of Investor Relation and Corporate Communications

Thank you Lisa and good morning everyone. Thank you for joining us for our third quarter conference call. I am joined today by Dr. John Scarlett Geron's Chairman and Chief Executive Officer; Olivia Bloom the company's CFO; and Dr. Aleksandra Rizo our Chief Medical Officer. After the market close yesterday we announced our third quarter 2019 financial results via press release. It is available on our website under www.geron.com/investors. This morning management will discuss the information from yesterday's press release. 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 this presentation and question-and-answer session contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Investors are cautioned that such forward-looking statements include any of the company's plans expectations time lines believes statements of potentiality and projections and without limitation those regarding to -- those regarding that the top line results from the Phase III portion of IMerge are expected to be available by midyear 2022 that there will be an end-of-Phase II meeting with the FDA by the end of first quarter 2020 that Geron may potentially develop imetelstat for relapsed/refractory MF patients and that Geron's 2019 operating expenses will be $80 million to $85 million. All of these 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 limitations those regarding that the company may be unable to overcome all the clinical safety efficacy technical scientific operational manufacturing and regulatory challenges to enable the top line results from the Phase III portion of IMerge to be available by midyear 2022 that regulatory authorities may not comment the further development of imetelstat on a timely basis or at all that the company may decide not to develop imetelstat for relapsed/refractory MF patients and that there may be unexpected operating expenses or events that cause the $80 million to $85 million 2019 financial guidance to be revised. 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 under the heading Risk factors in Geron's quarterly report on Form 10-Q for the quarter ended September 30 2019 filed with the SEC.

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.

With that I'd like to turn the call over to Dr. John Scarlett Geron's Chairman and CEO. Chip?

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

Thanks Suzanne and good morning everyone. Geron continues to execute on its key 2019 imetelstat development plans with the achievement of several important milestones this past quarter. We assumed full control of all development for imetelstat by completing the transition of the program back to Geron from Janssen at the end of the third quarter. This means that in addition to the U.S. we're now responsible for both IMerge and IMbark in all countries where the trials are being conducted. In August we opened the Phase III IMerge trial for screening and enrollment and in October we announced the first patient and dose. More recently in September we announced that the FDA granted Fast Track designation to imetelstat for the treatment of adult patients with intermediate-2 or high-risk myelofibrosis whose disease has relapsed after or is refractory to JAK inhibitor treatment. This is the same patient population that we studied in Geron's IMbark Phase II clinical trial. With no marketed drug specifically approved for relapsed/refractory MF there's a significant unmet medical need for this indication.

The FDA's Fast Track program is designed to facilitate the development and expedite the review of new drugs that are intended to treat serious conditions and that are supported by data that demonstrate the potential to address an unmet medical need. We view the Fast Track designation positively as it provides opportunities for more frequent interactions with the FDA the ability to submit sections of a New Drug Application on a rolling basis and the eligibility to request priority review of an NDA. On the call today Olivia will review our third quarter financial results and expectations around future development costs. Next Aleksandra will comment on the abstracts that were published yesterday morning for the upcoming American Society of Hematology Annual Meeting that will be held in December and the current status of the Phase III IMerge trial. After that I'll sum up the call with you.

So I'd like to turn the call over to Olivia our CFO who will review financial results for the third quarter. Olivia?

Olivia K. Bloom -- Chief Financial Officer, Executive Vice President-Finance, Treasurer

Thank you Chip and good morning everyone. For the third quarter of 2019 we reported a net loss of $15.2 million or $0.08 per share compared to $5.6 million or $0.03 per share for the third quarter in 2018. Net loss for the first nine months of 2019 was $39.5 million or $0.21 per share compared to $19.7 million or $0.11 per share for the first nine months of 2018. Revenues for the three and nine months ended September 30 2019 were $131000 and $289000 respectively compared to $165000 and $691000 for the same periods in 2018. Revenues for the three and nine months ended September 30 2019 and 2018 included royalty and license fee revenues under various non-imetelstat license agreements. The decline in revenue reflects a reduction in the number of active research license agreements in 2019 related to the company's telomerase reverse transcriptase or hTERT technology as a result of patent expiration on the underlying technology. Total operating expenses for the three and nine months ended September 30 2019 were $16.1 million and $42.8 million respectively compared to $7 million and $22.2 million for the comparable 2018 period. Research and development expenses for the three and nine months ended September 30 2019 were $11.1 million and $27.1 million respectively compared to $2.7 million and $8.4 million for the same periods in 2018.

The increase in research and development expenses compared to the same periods in 2018 primarily reflects costs for the transition of the imetelstat program including resuming sponsorship of the ongoing imetelstat clinical trials; expenses for start-up activities for the Phase III IMerge trial; and higher personnel-related costs for the expanding development team. General and administrative expenses for the three and nine months ended September 30 2019 were $5 million and $15.6 million respectively compared to $4.3 million and $13.8 million for the same periods in 2018. The increase in general and administrative expenses compared to the same periods in 2018 primarily reflects higher corporate and patent legal costs and increased personnel-related expenses for additional head count to support the development organization.

Interest and other income for the three and nine months ended September 30 2019 were $1 million and $3.3 million respectively compared to $1.1 million and $2.2 million for the comparable 2018 periods. The overall increase in interest and other income in 2019 compared to the same periods in 2018 primarily reflects higher yields on our increased marketable securities portfolio. We ended the third quarter of 2019 with $159.3 million in cash and marketable securities. Since May 2019 we have raised cumulative net cash proceeds of approximately $19.3 million from the sales of an aggregate of 13214867 shares of common stock under an at-market issuance sales agreement after deducting sales commissions and other offering expenses payable by us. We expect these net cash proceeds to provide additional financial flexibility as we advance the imetelstat development program. The funds will support future development costs including the IMerge Phase III trial. As Chip mentioned we completed the transition of the imetelstat program from Janssen at the end of the third quarter of 2019. Last quarter in June we signed a clinical supply agreement with Janssen to purchase certain inventories of drug product drug substance and raw materials for imetelstat manufacturing. Under the supply agreement we will pay Janssen approximately $7.5 million for drug product upon shipment of the product to our specified drug storage and distribution centers. We have also agreed to pay up to approximately $6.7 million for drug substance and raw materials upon testing and confirmation such materials meet certain specifications.

We are not obligated to purchase materials that do not have testing and conform to our quality specifications. We expect delivery of materials under the supply agreement and any testing to be completed by the end of December 2019 upon which we will recognize the associated expenses in accordance with the accrual method of accounting. We expect cash payments to Janssen for the materials to occur in the first quarter of 2020. As such we are reaffirming our 2019 guidance and continue to expect total operating expenses to range from $80 million to $85 million of which approximately $20 million to $25 million represents onetime costs that includes imetelstat program transition activity from Janssen to Geron and purchases of materials to supply the IMErge Phase III trial and prepare for new drug manufacturing. As you know we began the year with approximately $183 million in cash and marketable securities.

We estimate our year-end cash and marketable securities to be approximately $145 million to $150 million. This projection includes our 2019 operating expense guidance adding back certain liabilities that will be paid in 2020 such as the purchases of Janssen materials interest income to be earned in 2019 and the $19.3 million in net cash proceeds raised under the ATM program. As of October 31 Geron has 42 employees and plans to grow to a total of approximately 45 to 50 employees by year-end 2019 of whom half will be research and development personnel.

With that I will turn the discussion to Aleksandra.

Aleksandra Rizo -- Executive Vice President and Chief Medical Officer

Thanks Olivia. I will comment on the 2 abstracts accepted as poster presentations at the ASH Annual Meeting to be held in December. The abstracts can be found on the ASH website at www.hematology.org. Let me start with the abstracts reporting data from nonclinical laboratory experiments on the potential effects of combining imetelstat and ruxolitinib on malignant myelofibrosis or MF cells. Ruxolitinib is the first drug approved for the treatment of myelofibrosis and until recently was the only drug. The 2 sets of nonclinical experiments described in this abstract explore the hypothesis that the combination of imetelstat and ruxolitinib might create a treatment regimen format that could be more efficacious than using either drug alone. In the first set of experiments spleen cells from MF patients and cord blood cells from healthy individuals each containing hematopoietic stem and progenitor cells were growing in a tissue culture lab and were treated with 1 of 4 regimens: imetelstat alone ruxolitinib alone a combination of ruxolitinib and imetelstat given simultaneously and a combination of ruxolitinib and imetelstat given sequentially.

In the second set of experiments mice were transplanted with either MF spleen cells or normal cord blood cells and then treated with 1 of the 4 regimens as used in the first set of experiments. In both set of experiments the sequential treatment of ruxolitinib followed by imetelstat resulted in significant reductions in the numbers and the functions of the malignant hematopoietic stem and progenitor cells originating from the MF spleen compared to either treatment alone or the simultaneous treatment regimen. Furthermore in both set of experiments the sequential treatment regimen did not affect the hematopoietic stem and progenitor cells originating from the normal cord blood cells. The results from these experiments provide a potential additional application of imetelstat in treating MF. Because the complexities involved with combining 2 therapies with overlapping toxicities have not been explored further research would be needed to determine the appropriate dose and schedule of the combination treatment before we could decide to pursue this as a potential treatment regimen for MF. In the meantime since imetelstat has shown single-agent activity in various hematologic malignancies we intend to prioritize our efforts on advancing imetelstat as an individual treatment regimen.

The second abstract accepted for ASH was in a new category called trials in progress. Abstracts for this category describe innovative clinical trials that have not reached their primary endpoint to provide opportunities for early engagement and collaboration among translational clinical and industry investigators statisticians and regulators. In addition abstracts in this category enhance the visibility of ongoing clinical trials to pursue a patient recruitment. We are pleased that the Phase III IMerge trial has been included in this new category and details of the trial design will be presented in a poster. Many aspects of the Phase III trial design including the primary and secondary endpoints the target patient population and the dose and schedule of imetelstat administration remain consistent with the Phase II portion of the trial. In addition to the presentations of the 2 abstracts we also look forward to the upcoming ASH Annual Meeting and corresponding 3 additional educational symposia. And we'll have the opportunity to connect to the investigators and trials will be actively involved in patient recruitment and enrollment. With regard to the phase III IMerge trial start-up activities we have recently hosted 2 meetings one in U.S. and one in Europe for investigators and participating site personnel.

The reception at these meetings has been very positive. The first patient was dosed in October and approximately 30% of the site are open for enrollment. At this stage of the trial it is too early to determine what the enrollment dynamics will be since less than 50% of the sites are open and many of the sites that are expected to be high enrollers particularly in Europe have yet to be opened. We expect to have a better sense of enrollment dynamics by the end of the first quarter of 2020. Going forward we plan to provide qualitative updates on enrollment during our quarterly conference calls. We will expect to announce when half of the patients have been involved in the trial and when the trial is fully enrolled. Based upon our current planning assumptions we continue to expect top line results by midyear 2022.

And now I will turn the discussion back to Chip.

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

Thanks Aleksandra. Moving on to MF. As discussed previously we're currently in the process of preparing to conduct an end-of-Phase II meeting with the FDA by the end of the first quarter of 2020 and will subsequently announce our decision regarding any potential future late-stage development plans for relapsed/refractory MF. This decision will be influenced by among other things the nature of our discussions with the FDA by our assessment of what would be required to achieve clinical and regulatory success in this indication including the cost and duration of any potential clinical trials required for regulatory approvals in the United States and European Union. So in summary we're a much different company today than we were a year ago. We continue to make great progress in 2019 from building a solid foundation of in-house expertise in hematology/oncology and in late-stage development to dosing the first patient in the Phase III IMerge clinical trial.

We're focused on opening sites to enable patient recruitment and enrollment for the Phase III and on preparing for the end-of-Phase II meeting with the FDA on -- in relapsed/refractory MF. All of the development activities completed to date and planned for the future support the development of imetelstat as a potential treatment to address unmet medical needs in hematologic myeloid malignancies. We look forward to the remainder of this pivotal year. As we continue to execute on our 2019 development plans we believe our accomplishments will translate into shareholder value over the long term.

So with that we're now happy to answer your questions and we'll turn the call back to the operator.

Operator

[Operator Instructions] And our first question comes from the line of Charles Duncan from Cantor Fitzgerald. Your line is open.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

Good morning. This is Pete Stavropoulos on for Charles. One question regarding -- so you -- we have a potential approval of luspatercept. And I was wondering whether you think you may have difficulty enrolling RS-positive patients into the study given that the physicians may steer them toward an approved drug. If so how do you think that may affect the overall study time line? And would you consider enrolling patients that relapse or refractory to luspatercept into the IMerge study?

Aleksandra Rizo -- Executive Vice President and Chief Medical Officer

I'm happy to. It's Aleksandra. I'll take that question. So I mean as we just mentioned right we are open for screening and enrollment. And we expect to be pretty far along in the enrollment process by the time of the PDUFA date for luspatercept. And that will fall perhaps with the approval in Europe during the second half of 2020. So we would expect to be close to completing enrollment by that time. And just based upon what we know today we believe that it is unlikely that the potential approval of luspatercept will impact our enrollment time line.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

Okay. And for the abstracts for ASH you're going to present nonclinical data for the regimen of sequential treatment of a JAK inhibitor with imetelstat. So is there a possibility of adding an MF -- arm into the MF study for this treatment regimen? And do you think it's going to be one of the list of topics with the FDA at the end-of-Phase II meeting?

Aleksandra Rizo -- Executive Vice President and Chief Medical Officer

As I mentioned right more work would need to be done to pursue a clinical study with the combination so that would include careful exploration of the overlapping toxicities between the 2 drugs. At the moment our resources and bandwidth are focused on advancing imetelstat as a single-agent treatment such as the IMerge Phase III clinical trial and also we work hard on determining the potential regulatory path for relapsed/refractory MF. So I -- we believe at the moment it should stay our focus.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

Okay. And can you speculate as to why sequential dosing rather than simultaneous dosing may have a greater reduction in MF hematopoietic cells and progenitor cells?

Aleksandra Rizo -- Executive Vice President and Chief Medical Officer

Right right. Yes so we -- yes I can give you some flavor of that. And as you might know ruxolitinib has been reported to be a DNA-damaging agent and not an antiapoptotic agent. So with the experiments with the sequential treatment what happens is that you first induce DNA damage into these MF malignant cells. And after that you induce an antiapoptotic agent like imetelstat. Therefore the combination has an attitude or effect or synergistic effect if you will on the malignant cells. That's the hypothesis given.

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

Thank you very much in regards on progress over the quarter.

Operator

Our next question comes from the line of Tom Shrader from BTIG. Your line is open.

Kaveri Pohlman -- BTIG -- Analyst

Hi, This is Kaveri for Tom. I just have one on IMerge. Could there be any incremental data from the Phase II trial between now and when we first expect data from the Phase III study?

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

In other words any kind of interim analysis or any kind of other data is that the question? Or did I miss that?

Kaveri Pohlman -- BTIG -- Analyst

Yes.

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

Oh I'm sorry.

Olivia K. Bloom -- Chief Financial Officer, Executive Vice President-Finance, Treasurer

I think she's asking whether we'll have any follow-up data from the Phase II portion of IMerge in the future.

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

Okay.

Aleksandra Rizo -- Executive Vice President and Chief Medical Officer

At the moment we do not plan to have that at least not at the next ASH or EHA conference. We will look at the data as it evolves and will let you know if that's changed.

Kaveri Pohlman -- BTIG -- Analyst

Thank you.

Operator

And our next question comes from the line of Gil Blum from Needham & Company. your line is open.

Gil Blum -- Needham & Company. -- Equity Research Analyst

Everyone, thanks for taking my question. Just a quick one about modeling. I just want to make sure I understood. So we expect a pretty significant pickup on Q4 R&D expenses. Is that a good way to look at this?

Olivia K. Bloom -- Chief Financial Officer, Executive Vice President-Finance, Treasurer

Yes Gil. As you probably have seen through the year there has been a steady increase in the -- pickup in both R&D and G&A expense especially R&D obviously for the start-up activities for the Phase III as well as the hiring of individuals into the development team.

Gil Blum -- Needham & Company. -- Equity Research Analyst

All right. And -- but my question is more of am I expecting a very significant increase mostly in the fourth quarter to be almost like a one-off in that sense?

Olivia K. Bloom -- Chief Financial Officer, Executive Vice President-Finance, Treasurer

Yes. And that's as a result as I mentioned about the purchases of the supply materials that are coming from Janssen. But if you add the 2 together that's almost $14 million. And because we expect the delivery and the testing activities to be completed by the end of the year I need to accrue them for accounting purposes. And those expenses may hit in 2019 even though the cash will hit -- the cash outlay will not hit until the following quarter.

Gil Blum -- Needham & Company. -- Equity Research Analyst

Got you. That helps.

Olivia K. Bloom -- Chief Financial Officer, Executive Vice President-Finance, Treasurer

Okay.

Gil Blum -- Needham & Company. -- Equity Research Analyst

And just one more about ASH. But it seems like we're going to get a pretty exciting ASH for myelofibrosis. We're getting some data from Constellation I understand and there's more data coming out of fedratinib. But do you guys think maybe relapsed/refractory myelofibrosis is getting kind of highlighted in this upcoming ASH?

Aleksandra Rizo -- Executive Vice President and Chief Medical Officer

I think it's always a good news for patients to have new data for potentially new drugs available for them. I mean the Japanese data -- you're right right? There are a few abstracts that are both in frontline and relapsed/refractory MF. Fedratinib clearly continues to show clinical benefit however you analyze the data. Again imetelstat has a different mechanism of action than fedratinib so that's where we stay focused and differentiate. In terms of the Constellation data that is being reported as you mentioned again both data on frontline and relapsed/refractory MF just as an observation right that the data is intriguing and it's early and it remains to be seen how the data will mature. So yes I mean it's good ASH for myelofibrosis as you say.

Gil Blum -- Needham & Company. -- Equity Research Analyst

Congratulations on the progress in this quarter.

Aleksandra Rizo -- Executive Vice President and Chief Medical Officer

Thank you.

Olivia K. Bloom -- Chief Financial Officer, Executive Vice President-Finance, Treasurer

Thank you.

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

Thanks very much.

Operator

[Operator Instructions] And this ends the Q&A session. I will turn the call over to Dr. John Scarlett for closing remarks.

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

Thanks everybody for joining us today. Look forward to reporting continued progress as we go forward here. Have a good day. Bye.

Operator

[Operator Closing Remarks].

Duration: 27 minutes

Call participants:

Suzanne Messere -- Head of Investor Relation and Corporate Communications

John A. Scarlett -- Chairman of the Board, President and Chief Executive Officer

Olivia K. Bloom -- Chief Financial Officer, Executive Vice President-Finance, Treasurer

Aleksandra Rizo -- Executive Vice President and Chief Medical Officer

Charles Duncan -- Cantor Fitzgerald -- Analyst

Kaveri Pohlman -- BTIG -- Analyst

Gil Blum -- Needham & Company. -- Equity Research Analyst

Pete Stavropoulos -- Cantor Fitzgerald -- Analyst

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