Geron Corporation GERN is set to report fourth-quarter 2014 results on Mar 3 after the market closes. The company’s average earnings surprise in the last four quarters stands at a negative 5.56%. Let’s see how things are shaping up for this announcement.
Imetelstat to Remain in Focus
During the fourth quarter Geron inked a collaboration deal with Johnson & Johnson JNJ for its sole pipeline candidate, imetelstat. As per the deal Johnson & Johnson gained exclusive global rights to develop and commercialize imetelstat for oncology, including hematologic malignancies, and other human therapeutics uses.
The deal comes shortly after the FDA lifted its full clinical hold on an investigational new drug (IND) application filed by the company for imetelstat. We note that imetelstat’s development plans had suffered a setback earlier in 2014 when the FDA placed a full clinical hold on Geron’s IND for the candidate.
Under the collaboration, Geron could receive up to $935 million (including an upfront payment of $35 million) as well as royalties on sales of the candidate on approval. Both companies will equally share the development costs of various studies on imetelstat, which include phase II studies in myelofibrosis (MF) and initial studies in myelodysplastic syndrome (MDS), additional registration studies in MF and MDS, and an exploratory phase II and potential follow-on phase III studies in acute myelogenous leukemia (AML).
Geron plans to commence a phase II study on imetelstat for the treatment of MF in mid-2015 which will be followed by a phase II study for MDS.
Geron’s revenues primarily consist of royalties and license fees. The company’s research and development expenses might increase this quarter due to higher costs for the manufacturing of imetelstat.
We expect investor focus to remain on imetelstat related updates that the company is expected to provide along with its fourth quarter results.
Earnings Whispers?
Our proven model does not conclusively show that Geron is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.
Zacks ESP: Earnings ESP for Geron is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are at 17 cents per share.
Zacks Rank: Geron carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of the ESP, the company’s 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows that they have the right combination of elements to post a beat this quarter.
Amarin Corporation plc AMRN has an earnings ESP of +14.29% and carries a Zacks Rank #2. It is set to report fourth-quarter results on Mar 3.
Aratana Therapeutics, Inc. PETX has an earnings ESP of +10.00% and carries a Zacks Rank #3. It is expected to report fourth-quarter results on Mar 12.
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