Geron (GERN) Q1 Loss Narrows Y/Y, Revenues Fall, Shares Down

Geron Corporation (NASDAQ:GERN) reported a loss of 4 cents per share for the first quarter of 2018, narrower than the year-ago loss of 5 cents.

Quarterly revenues fell 40.8% from the year-ago quarter to $0.32 million. Revenues comprised royalty and license fee revenues received under various non-imetelstat license agreements. The company stated that active non-imetelstat license agreements reduced in numbers and products sales from the licensees decreased.

Shares were down 5.5% in pre-market trading on May 11. However, so far this year, Geron’s shares have significantly outperformed the industry, rising 101.7%, against the industry’s decline of 11.3%.

Research and development (R&D) expenses declined 27.7% to $2.4 million. The decline was due to decreased stock-based compensation and lower costs for the proportionate share of clinical development costs for imetelstat under collaboration with Janssen, a subsidiary of Johnson & Johnson (NYSE:JNJ) .

General and administrative (G&A) expenses rose 14.1% to $5.3 million due to consulting costs and legal costs.

The company ended the quarter with $103.2 million in cash and investments compared with $109.2 million at the end of the fourth quarter.

Pipeline Update

Geron’s sole pipeline candidate, imetelstat, is being evaluated in two mid-stage studies – IMerge and IMbark – in myelodysplastic syndromes (“MDS”) and myelofibrosis (“MF”), respectively. Geron is conducting the studies in collaboration with J&J.

In December 2017, Geron presented preliminary data from part I of phase II/III IMerge study. Data showed that imetelstat achieved RBC transfusion-independence (RBC-TI – reduced or no requirement of RBC transfusion over a certain interval) in 54% of the patient population, who have not received prior treatment with either lenalidomide or a hypomethylating agent, for at least eight weeks. RBC-TI was achieved in 31% of the patients in the above subset for at least 24 weeks.

Based on this data, J&J expanded part I of the study to include 20 more patients in a refined MDS indication to confirm the clinical benefit and safety observed earlier. In October 2017, the FDA granted fast track designation to imetelstat based on data from part 1 of IMerge.

Meanwhile, the clinical benefit and a potential overall survival benefit observed during the third internal review in March 2018 supported continuation of the phase II IMbark study without modifications.

However, J&J is planning to amend the protocol of the study to allow long-term treatment of patients. The amendment will be based on a primary analysis of data from the study, which is expected in the second quarter of 2018. J&J will also notify Geron about continuation of the study based on this analysis, which is expected in the third quarter of 2018.

Zacks Rank & Key Picks

Geron currently carries a Zacks Rank #2 (Buy).

A couple of other stocks to consider in the biotech sector are Ligand Pharmaceuticals (NASDAQ:LGND) , and Enanta Pharmaceuticals, Inc. (NASDAQ:ENTA) . While Ligand sports a Zacks Rank #1 (Strong Buy), Enata carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ligand’s earnings per share estimates moved up from $4.20 to $4.43 for 2018 and remained stable at $5.32 for 2019 over the last 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 31.79%. The company’s shares have rallied 25.4% year to date.

Enanta’s earnings per share estimates significantly increased from 86 cents to $2.48 for 2018 over the last 30 days. The company came up with an average beat of 372%. The stock has surged 68.2% so far this year.

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