Geron Corporation
(
GERN
) posted a net loss of 13 cents per share in the third quarter of
2012, narrower than the Zacks Consensus Estimate of a loss of 14
cents and the year-ago loss of 16 cents. Third quarter revenues
of $636,000 were well above the Zacks Consensus Estimate of
$200,000 and the year-ago revenues of $220,000. Higher revenues
and a significant decline in expenses led to the narrower
loss.
Quarter in Detail
Revenues consisted entirely of royalties and license fees.
Geron has several license agreements with various oncology,
diagnostics, research tools, agriculture and biologics production
companies. Geron did not recognize any revenues from
collaborative agreements in the reported quarter.
Total operating expenses declined 18.1% to $16.5 million.
Research and development expenses declined 28.5% to $11.7 million
due to reduced personnel-related costs and lower scientific
supply expenses resulting from the discontinuation of the stem
cell programs. Meanwhile, general and administrative expenses
increased 26.7% to $4.8 million. Higher legal and consulting fees
associated with the company`s intellectual property portfolio and
the efforts to divest the stem cell portfolio led to the increase
in general and administrative expenses.
In November 2011, Geron had announced its intention to exit
the stem cell research market. The company, which was a leader in
stem cell research, intends to focus on its oncology programs
instead. In October 2012,
BioTime, Inc.
(
BTX
) had issued an open letter to Geron's stockholders regarding the
company's stem cell assets. In its letter, BioTime had come up
with a series of transactions that would result in the transfer
of Geron's stem cell assets to a subsidiary of BioTime. Geron is
currently reviewing the proposal.
During 2012, Geron expects cash usage of about $65 million,
which means the company should exit the year with about $90
million in cash and investments. Geron is currently reviewing all
its programs to determine the proper allocation and usage of
funds. The company expects to complete the review by year end.
While Geron did not provide specific guidance for 2013, it said
that it expects its 2013 burn rate to decline compared to
2012.
Key candidates in the company's oncology program include
imetelstat and GRN1005. GRN1005 is in two phase II studies - one
in breast cancer patients with brain metastases and the other in
non-small cell lung cancer patients with brain metastases. While
top-line data from the breast cancer study should be out in the
second quarter of 2013, the non-small cell lung cancer study is
currently running behind schedule due to slower-than-expected
patient enrolment.
Geron said that it is evaluating the viability of continuing
with the study given the enrolment challenges.
Meanwhile, imetelstat is being studied for hematologic
malignancies - two single-arm phase II trials are ongoing, one in
essential thrombocythemia (ET) and the other in multiple
myeloma.
As far as the solid tumor indication is concerned, Geron had
announced the discontinuation of a randomized phase II study of
imetelstat in metastatic HER2-negative breast cancer in September
2012. Although the company is continuing with a randomized phase
II study in advanced non-small cell lung cancer patients, it does
not expect the study to achieve the pre-specified success
criteria. As a result, the company does not expect to move
imetelstat into phase III studies for the non-small cell lung
cancer indication unless subsequent analysis shows significantly
different data.
Neutral on Geron
We currently have a Neutral recommendation on Geron. Geron
suffered a huge setback in September with the discontinuation of
imetelstat for breast cancer. Given the imetelstat update, we
have low expectations from this candidate and expect investor
focus to shift entirely to GRN1005. The company expects to
present interim data from the GRN1005 breast cancer trial
(GRABM-B) in early December. We prefer to remain on the sidelines
until we see data on GRN1005.
(BTX): ETF Research Reports
GERON CORP (GERN): Free Stock Analysis Report
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