Geron Corporation’s (GERN) shares shot up 25.6% on news that the FDA has removed the full clinical hold on its investigational new drug (IND) application for its sole pipeline candidate, imetelstat.
Moreover, the FDA said that the company’s plans for the development of imetelstat for high-risk myeloid malignancies like myelofibrosis (MF) are acceptable.
Imetelstat had run into trouble earlier this year with the FDA placing a full clinical hold on the company’s IND application for the candidate. A clinical hold is an order issued by the FDA under which the sponsor of the study is asked to delay a proposed trial or suspend an ongoing trial.
Soon after the full clinical hold was announced, a partial clinical hold was placed on an investigator-sponsored study which meant that new patients could not be enrolled in the study being conducted by Mayo Clinic.
The FDA’s main concern was about the occurrence of persistent low-grade liver function test (LFT) abnormalities in the phase II study for essential thrombocythemia/polycythemia vera (ET/PV) as well as the potential risk of chronic liver injury following long-term exposure to imetelstat. The agency expressed concern about the possibility of reversing these LFT abnormalities.
In order to address the FDA’s concerns, Geron provided clinical follow-up information on patients in the previously ongoing company-sponsored phase II trials in ET and multiple myeloma (MM).
The analysis of this data showed that LFT abnormalities resolved to normal or baseline in 14 of the 18 follow-up patients in the ET trial. As far as the remaining four patients were concerned, three had shown an improvement in LFT abnormalities at the time of the data cut-off. One patient had unresolved LFT abnormalities.
Meanwhile, in the MM trial, LFT abnormalities resolved to normal or baseline in all nine follow-up patients. Importantly, neither study reported any emergent hepatic adverse events.
In accordance with the FDA’s requirements, Geron also submitted data from previously conducted non-clinical toxicology studies including a six-month study in mice and a nine-month study in cynomolgus monkeys. The company said that no clinical pathology changes indicative of hepatocellular injury were observed in these studies and no clear signal of LFT abnormalities were identified.
Third Quarter Results Overshadowed by Imetelstat News
Geron also reported third quarter 2014 results. The company posted a loss of 6 cents per share in the third quarter of 2014, a penny wider than the Zacks Consensus Estimate but in-line with the year-ago loss. Third quarter revenues of $160,000 declined 11.6% from the year-ago quarter. Revenues consisted entirely of royalties and license fees.
Total operating expenses increased 14.4% to $10 million. Research and development expenses grew 12.3% to $5.9 million reflecting higher costs related to the manufacturing of imetelstat.
Meanwhile, general and administrative expenses increased 17.7% to $4.1 million mainly due to higher non-cash stock-based compensation expense and legal costs that was partially offset by lower patent costs and transaction expenses associated with the Oct 2013 closing of the stem cell divestiture.
Our Take
Geron’s third quarter results were totally overshadowed by the removal of the full clinical hold on the IND application, which is a huge positive for Geron. The company’s growth prospects currently depend entirely on the successful development of imetelstat which is its sole pipeline candidate. With the full clinical hold being lifted, the company should be able to go ahead with its plans to initiate a multi-center phase II study in MF in the first half of 2015. Geron has no plans to develop imetelstat for ET or PV.
We expect investor focus to remain on imetelstat-related updates.
Geron is a Zacks Rank #3 (Hold) stock. Some better-ranked biotech stocks include Medivation, Inc. (MDVN), Biogen (BIIB) and Cytokinetics (CYTK). All three are Zacks Rank #1 (Strong Buy) stocks.
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