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Why Shares of Geron Corp. Cratered in January

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What : Shares of the clinical-stage oncology company Geron Corp. shed nearly 40% of their value last month, according to data provided by S&P Global Market Intelligence . Fortunately, this drastic sell-off didn't stem from a clinical or regulatory setback for the drugmaker -- but rather it appears simply to be the result of the market's change of heart toward all biotechs, especially risky development-stage companies like Geron.

So what : Geron is perhaps the poster child for high-risk/high-reward clinical-stage biotechs. After all, the biotech has put all of its weight behind developing a single drug following its restructuring process that started in 2011. This drug is a telomerase inhibitor called imetelstat that has the potential to be a truly disease-modifying treatment for deadly blood disorders such asmyelofibrosis and myelodysplastic syndrome. As the market seemingly lost its appetite for risk altogether, though, it's not surprising this risky small-cap biotech hit the skids in January.

Now what : Unfortunately, Geron may not be able to break out of this funk anytime soon. Going forward, the next major set of catalysts that could drive shares higher are the top-line data readouts from imetelstat's ongoing clinical trials for myelofibrosis and myelodysplastic, and these trials probably won't produce anything of note until at least the fourth-quarter of this year.

Turning to the big picture, Geron does have a rather favorable licensing deal in place with Johnson & Johnson for imetelstat that could trigger milestone payments of nearly $1 billion in total -- that is, if the drug continues down the road of turning into a truly game-changing treatment for myelofibrosis and possibly other blood-based disorders as well. As Johnson & Johnson has an almost uncanny ability of spotting promising cancer drugs early in their development, I think Geron does present a compelling value proposition for seasoned biotech investors that truly understand the significant risks involved.

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The article Why Shares of Geron Corp. Cratered in January originally appeared on Fool.com.

George Budwell has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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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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