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Sunday, October 25, 2020

As the Dust Settles for Geron Corporation (NASDAQ:GERN)

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Geron Corporation (NASDAQ:GERN) has been under heavy distribution lately following significant negative headline flow. The chart shows -30% knocked off shares in the past month, with most of that coming in reaction to the company’s recent revelation that its lower-dose myelofibrosis drug study (imetelstat in the 4.7 mg/kg dosing arm) was not effective enough to warrant any further investigation.

However, GERN has a history of dramatic rallies, and the company has more under the hood than just this version of the drug. But it is highly dependent on some form of imetelstat showing eventual promise. The stock is back down testing the $2 area, and is continuing to find some support there for the moment at least.

Geron Corporation (NASDAQ:GERN) bills itself as a clinical stage biopharmaceutical company that focuses on the development of telomerase inhibitor, imetelstat, for treating hematologic myeloid malignancies.

It has collaboration and license agreement with Janssen Biotech, Inc. to develop and commercialize imetelstat worldwide for indications in oncology, including hematologic myeloid malignancies and other human therapeutic uses.

The partnership with Janssen is the defining issue. The deal they have in place is for full and exclusive worldwide rights to develop and commercialize imetelstat for all human therapeutic uses, including hematologic myeloid malignancies. The decision to stop evaluating the 4.7 mg/kg dose of imetelstat in the IMbark study is a huge setback for Geron as it puts the company’s prospects into the hands of the 9.4 mg/kg group, clearly raising Geron’s risk profile.

Even still, the action tells a story: the movement of late shows what may still unfold should the company’s pipeline improve going forward: as the recent decision came into focus, the kneejerk gains before the dive were appreciable, with the stock launching 25% in just 3 days.

As noted above, the company is highly dependent on imetelstat for growth. Hence, one should expect investor’s to be laser-focused on any new details pertaining to the 9.4 mg/kg group in the IMerge study and additional internal review of data.

Analysts the likes of Needham and FBR Capital weighed in on the stock in recent days with no clear panic, suggesting a hold rating, some lowered price target expectations, and a wait-and-see approach.

At this time, carrying a capital value in the market of $327.8M, GERN has a significant stack of cash ($110.60M) in the treasury, along with total assets of nearly $140M, which is balanced by very little total accumulated debt, making for a fortress balance sheet as of last reporting quarter. However, a biotech without a clear star in the pipeline is an all-or-nothing affair leaning toward nothing as far as future prospects. That said, the company has been around for 26 years and has found ways to innovate in the past, as portrayed by their 260 patents currently on file with the USPTO. If they can pull it off again, the upside payoff for risk-takers could be monstrous given that the market is likely now expecting very little. To get the full story on GERN subscribe below to oracledispatch right now.

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