Geron (GERN) Q4 Loss Flat Y/Y, Revenues Surge, Shares Up

Geron Corporation (NASDAQ:GERN) reported a loss of 5 cents per share for the fourth quarter of 2017, which was wider than the Zacks Consensus Estimate of a loss of 4 cents and flat with the year-ago period.

Quarterly revenues surged 103% to $0.19 million from the year-ago quarter. Revenues, however, missed the Zacks Consensus Estimate of $1 million. Revenues comprised royalty and license fee revenues received under various non-imetelstat license agreements.

Shares were up 7.4% in after-hours trading on Mar 16. Moreover, so far this year, Geron’s shares have outperformed the industry, rising 87.2% during the period compared with the industry’s gain of 1.4%.

Research and development (R&D) expenses declined 39% to $2.5 million due to lower costs for the proportionate share of clinical development costs for imetelstat. General and administrative (G&A) expenses rose 14.6% to $5.5 million due to increased stock-based compensation and consulting costs, partially offset by lower legal costs.

The company ended the quarter with $109.2 million in cash and investments compared with $112.7 million at the end of the third quarter.

2017 Results

Revenues for the full year were significantly down to $1.1 million from $6.2 million in the year-ago period. We note that revenues in the year-ago quarter had included a $5 million upfront payment from Johnson & Johnson’s (NYSE:JNJ) subsidiary Janssen related to a licensing agreement.

The company reported a loss of 18 cents for the year, narrower than year-ago loss of 19 cents.

R&D expenses were down 38.9% to $11 million while G&A expenses were up 2.7% to $19.3 million.

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 8 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 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 & Stocks to Consider

Geron currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the pharma sector include Horizon Pharma Public Limited Company (NASDAQ:HZNP) and Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Horizon Pharma’s earnings estimates increased 10% to $1.43 for 2018 and 15% to $1.77 for 2019 over the last 30 days. The company delivered a positive earnings surprise in three of the four trailing quarters with an average beat of 68.92%.

Ligand’s earnings per share estimates increased 11% to $4.20 for 2018 and 12% to $5.32 for 2019 over the last 30 days. The company delivered a positive earnings surprise in three of the four trailing quarters with an average beat of 24.88%. The company’s shares are up 25.5% so far this year.

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