Geron Corporation (NASDAQ:GERN) finally revealed some updates on IMBark yesterday at ASH, and it was hardly the disaster that bears might have been expecting following J&J’s exodus from the imetelstat CLA in late September. However, shares have been unable to rally despite this new data. What gives? We have a few points to make on this.
First off, the company still failed to open the door and let the world in on IMBark. The data we got was promising, but it was like a set of snapshots of the skin of a toad. That doesn’t mean there are no warts around. A more transparent view of the situation may have inspired more conviction for new money because people still assume there must be some warts around somewhere (given that JNJ did in fact ditch the deal after investing a massive amount of money along the way).
Geron Corporation (NASDAQ:GERN) needs to rebuild that sense of credibility, and a highly staged reveal was likely not the best process.
Second, the value of the JNJ CLA was as much about financial feasibility as it was about confidence in the underlying blockbuster potential of imetelstat. After all, it takes more than science to get a great drug to the marketplace with wheels on. It takes money. Lots of it. Way more than the $166 million GERN is sitting on now.
In other words, completely aside from the imetelstat data, it may be hard for GERN shares to see much upside without at least the scent of a possible new “sugar daddy” around – either in the form of M&A or CLA.
For example, with the JNJ deal, imetelstat had access to an unparalleled future marketing apparatus and meant Geron would receive very substantial milestone payments along the way. It also meant imetelstat could be taken to market with far less dilution risk for current shareholders.
At this point, with no partnership deals in the works, the data has to be truly unambiguously perfect for the market to stop worrying about a dilution spiral ahead.
That means we need to see the toad in hi-def and from all angles and in good lighting. It’s not just about no warts. It’s about the common knowledge game of the market working in a “no warts” probability field at the 99%-plus end of the spectrum.
Interestingly, coming up on December 10 (a week from yesterday), the company has scheduled an event to go over IMBark and IMerge data with more detail and to discuss its implications.
That is the opportunity to push for a new partnership through the force of the data. And that means Mr. Scarlett will have to be exhaustively forthcoming if he wants to allow some discounting of uncertainty for bears to leak into the picture. It isn’t just about convincing retail investors. It’s about substantiating a low-risk track toward eventual approval in the eyes of industry insiders.
And yes, remarkably, this will take us to yet another binary event around this same data set. Hopefully, one way or the other, this will be the decisive one.
Getting to Know You
Geron Corporation (NASDAQ:GERN) operates as a biopharmaceutical company. The company supports the clinical stage development of imetelstat, a telomerase inhibitor for the treatment of hematologic myeloid malignancies.
It has a sunsetting collaboration and license agreement with Janssen Biotech, Inc. to develop and commercialize imetelstat worldwide for indications in oncology, including hematologic myeloid malignancies and other human therapeutic uses. Janssen is a subsidiary of Johnson & Johnson (NYSE:JNJ). That collaboration and licensing agreement was terminated late last month, as noted above.
GERN, founded in 1990 and based in Menlo Park, California, has been running two key studies.
IMerge is a two-part clinical trial evaluating imetelstat in transfusion-dependent patients with Low or Intermediate-1 risk myelodysplastic syndromes (MDS) who have relapsed after or are refractory to prior treatment with an erythropoiesis stimulating agent, or ESA. The primary efficacy endpoint is the rate of red blood cell transfusion independence lasting at least 8 weeks. Part 1 is a Phase 2, open-label, single-arm trial of imetelstat, and Part 2 is designed to be a Phase 3, randomized, controlled trial. Part 2 has not yet begun.
IMbark is a Phase 2 trial in patients with Intermediate-2 or High-Risk myelofibrosis (MF) who have relapsed after or are refractory to prior treatment with a JAK inhibitor. This was the primary focus for the GERN/JNJ collaboration.
Geron Corporation (NASDAQ:GERN) pulled in sales of $165K in its last reported quarterly financials, representing top line growth of 1.2%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($166.6M against $4.5M).