Geron (GERN) Q2 Loss In Line, Revenues Up Y/Y, Shares Down

Geron Corporation GERN reported a loss of 4 cents per share for the second quarter of 2018, in line with the Zacks Consensus Estimates and flat year over year.

Quarterly revenues increased 19.5% from the year-ago quarter to $0.21 million. Revenues comprised royalty and license fee revenues received under various non-imetelstat license agreements.

Shares were down 5% in pre-market trading on Aug 1, presumably due to lack of clarity on Janssen’s, a subsidiary of Johnson & Johnson JNJ, decision to pursue imetelstat development. However, so far this year, Geron’s shares have significantly outperformed the industry, rising 99.5%, against the industry’s decline of 4.4%.

Research and development (R&D) expenses increased 28% to $3.2 million. The rise was due to variation in costs for the proportionate share of clinical development of imetelstat under collaboration with Janssen. General and administrative (G&A) expenses fell 4.5% to $4.2 million.

The company ended the quarter with $181.4 million in cash and investments compared with $103.2 million at the end of the first quarter. The increase in cash was due to $87 million net of proceeds raised through sale of its common stock under At Market Issuance Sales Agreements.

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.

Janssen stopped enrollment in the IMbark study in March. Moreover, during the second quarter, a protocol-specified primary analysis of IMbark was initiated by Janssen. Following the completion of this analysis, Janssen will decide on continued development of imetelstat in this indication. The decision is expected by the end of the third quarter.

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 and enrolled 25 more patients in a refined MDS indication to confirm the clinical benefit and safety observed earlier.

Zacks Rank & Stocks to Consider

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

A couple of better-ranked stocks to consider in the biotech sector are Vertex Pharmaceuticals Inc. VRTX and Seattle Genetics, Inc. SGEN. 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.

Vertex’s earnings per share estimates moved up from $3.16 to $3.79 for 2018 and from $4.33 to $4.58 for 2019 over the last 30 days. The company delivered a positive earnings surprise in all the trailing four quarters, with an average beat of 27.5%. The company’s shares have rallied 25.4% year to date.

Seattle Genetics’ loss per share estimates narrowed from $1.81 to $1.27 for 2018 and from 81 cents to 68 cents over the last 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 12.93%. The stock has surged 68.2% so far this year.

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