Geron Corporation GERN reported earnings of 17 cents per share in the third quarter of 2015, compared to a loss of 6 cents per share in the year-ago period and above the Zacks Consensus Estimate of earnings of 11 cents per share. Third quarter 2015 results benefited from the recognition of the $35 million upfront payment from Johnson & Johnson’s JNJ Janssen related to their collaboration agreement for imetelstat.
Total revenues, which increased to $35.4 million in the third quarter of 2015 from $160,000 in the year-ago period, were well above the Zacks Consensus Estimate of $24 million.
The Quarter in Detail
Research and development (R&D) expenses declined 31.7% to $4.1 million reflecting the impact of lower personnel-related and other research costs resulting from the organizational resizing. We remind investors that in March, Geron had announced a restructuring plan under which the company reduced its workforce from 39 to 21.
This was partially offset by increased costs for the development of imetelstat in collaboration with Janssen for hematologic myeloid malignancies. Geron expects R&D expenses to increase during the remainder of the year as the development of imetelstat continues in collaboration with Janssen.
Imetelstat is currently in a phase II study (IMbark) – two doses of imetelstat will be evaluated in patients with DIPSS intermediate-2 or high-risk myelofibrosis who have relapsed after or are refractory to a JAK inhibitor. Another study will be conducted in myelodysplastic syndrome.
General and administrative expenses increased 4.9% to $4.3 million mainly due to higher non-cash stock-based compensation expense and legal costs associated with associated with the company’s patent portfolio.
Geron is a Zacks Rank #3 (Hold) stock. We are positive on the company's agreement with Johnson & Johnson which provides it with a strong partner as well as funds. The company’s growth prospects currently depend entirely on the successful development of imetelstat which is its sole pipeline candidate. We expect investor focus to remain on imetelstat and business development updates.
Some better-ranked stocks in the health care sector include Actelion Ltd. ALIOF and Baxalta Incorporated BXLT. Both are Zacks Rank #1 (Strong Buy) stocks.
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