Geron Q3 Loss in Line; Shares Up on ASH Abstract - Analyst Blog

Shares of Geron Corporation ( GERN ) shot up almost 45% immediately after the American Society of Hematology (ASH) posted an abstract on its site regarding imetelstat. Although shares pulled back in the next trading session, overall gains since the release of the abstract were 28.1%.

Geron reported third quarter results on the same day. The company posted a net loss of 6 cents per share in the third quarter of 2013, in line with the Zacks Consensus Estimate but narrower than the year-ago loss of 13 cents. Third quarter revenues of $181,000 were below the year-ago revenues of $636,000 and the Zacks Consensus Estimate of $500,000. A significant decline in expenses led to the narrower loss.

Quarter in Detail

Revenues consisted entirely of royalties and license fees. Total operating expenses declined 46.7% to $8.8 million. Research and development expenses declined 54.7% to $5.3 million due to reduced personnel-related costs and lower costs related to the manufacturing of drugs as well as lower costs resulting from the winding-down of the imetelstat (metastatic breast cancer and advanced non-small cell lung cancer) and GRN1005 (brain metastases) studies.

Meanwhile, general and administrative expenses declined 27.1% to $3.5 million mainly due to lower personnel-related costs and lower legal and consulting costs.

ASH Abstract Looks Promising

An abstract on imetelstat, selected for presentation at ASH from an ongoing investigator-sponsored trial in patients with myelofibrosis (MF), was made available to the public. The abstract contained preliminary safety and efficacy data selected and interpreted by the investigator.

Results showed that out of 18 evaluable patients, overall response rate was 44% including 4 complete responses and 1 partial response. Reversal of bone marrow (BM) fibrosis and recovery of normal megakaryocyte morphology was observed in the 4 complete response patients.

Imetelstat looked tolerable in the first cohort with no grade-4 treatment-related adverse events. However, in the second cohort, 29% of the patients experienced grade-4 thrombocytopenia and 11% of the patients required a dose reduction due to grade 3 or 4 myelosuppression.

Overall, the results indicate that imetelstat has the potential to be effective in patients with myelofibrosis. This is encouraging news for Geron as imetelstat remains its sole pipeline candidate. Depending on input from regulators, investigators, and other experts, along with further insights from the additional and updated safety and efficacy data to be presented at ASH, Geron is looking to design and initiate a company-sponsored multi-center study in MF in the first half of 2014. Additional information regarding the company's plans should be out in the first quarter of 2014.

Our Take

Geron's third quarter results were overshadowed by the ASH abstract on imetelstat. The data looks encouraging and Geron may very well have another shot at developing imetelstat. The company did not have much success in developing imetelstat for breast cancer and non-small cell lung cancer earlier. While we believe this data supports the further development of imetelstat, we note that the data is early-stage in nature.

Geron carries a Zacks Rank #3 (Hold). Currently, companies like Actelion Ltd. ( ALIOF ), AMAG Pharmaceuticals, Inc. ( AMAG ) and Osiris Therapeutics, Inc. ( OSIR ) look well-positioned with all three being Zacks Rank #1 (Strong Buy) stocks.


AMAG PHARMA INC (AMAG): Free Stock Analysis Report

GERON CORP (GERN): Free Stock Analysis Report

OSIRIS THERAPTC (OSIR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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