Geron Corporation GERN reported a first-quarter 2015 loss of 6 cents per share, in line with the Zacks Consensus Estimate and the loss incurred in the year-ago period.
Total revenues increased 13.3% to $0.5 million in the first quarter of 2015, slightly above the Zacks Consensus Estimate of $0.4 million. Revenues consisted entirely of license fees and royalties.
The Quarter in Detail
Research and development (R&D) expenses declined 4.3% to $5 million reflecting lower manufacturing costs related to imetelstat. This was partially offset by increased costs for the development of imetelstat being developed in collaboration with Johnson & Johnson JNJ, for hematologic myeloid malignancies. Meanwhile, Geron expects R&D expenses to increase during the remainder of the year as the development of imetelstat continues in collaboration with Johnson & Johnson.
General and administrative expenses increased 15.2% to $4.6 million mainly due to higher non-cash stock-based compensation expense, legal costs and consulting costs associated with the business development activities to identify potential new product candidates.
In Mar 2015, Geron transferred imetelstat’s investigational new drug application (IND) to Johnson & Johnson as per the agreement terms. Geron also transferred the IND for imetelstat for myelofibrosis to Johnson & Johnson.
A phase II study on imetelstat is expected to commence for the treatment of myelofibrosis in mid-2015 which will be followed by a phase II study for myelodysplastic syndromes toward year end.
We remind investors that in March, Geron had announced a restructuring plan which will see the company cutting its workforce from 39 to 21, the majority of which will be completed by the end of the second quarter of this year. The company expects the resizing to reduce personnel-related costs by approximately $5 million on an annualized basis.
Geron estimates operational expenses to decline as a result of its collaboration with Johnson & Johnson. The company expects to incur restructuring charges of approximately $1.7 million, the majority of which will be recognized in the first half of 2015. Moreover, about $1.4 million of these charges are expected to be paid in cash during 2015.
Geron’s first-quarter results were encouraging. 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.
Meanwhile, the company has a couple of events lined up this month. We expect investor focus to remain on imetelstat and business development related updates.
Geron currently carries a Zacks Rank #2 (Buy). Actelion Ltd. ALIOF and BioMarin Pharmaceutical Inc. BMRN are other favorable stocks in the health care sector. Both hold a Zacks Rank #1 (Strong Buy).
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