new article today

[jayfish101]

Avisol Capital Partners
Investing Group Leader
Summary
Geron Corporation stock has nearly halved since July, leading to concerns about
whether the price will go back up.
Geron's telomerase inhibitor imetelstat has a PDUFA on June 16, 2024, with an
advisory committee meeting expected before that date.
The FDA's request for an advisory committee meeting suggests that the approval
for imetelstat may not be straightforward.
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Artur Plawgo
Since I wrote in July that Geron Corporation (NASDAQ:GERN) prices then were
unlikely to return, the stock has nearly halved. This has prompted people to ask me
whether I meant the price was never going to go back up. I hope that’s a joke - even if
on me - because Geron has a PDUFA next year, and it will be terrible if the price
doesn’t cross my buy price. 2023 is a terrible year for biopharma, and it is difficult to
make sound predictions based on data and fundamentals alone. Market perception
plays a major role in troubled times, and the perception these days is that the entire
sector is up for a toss.
Geron is another of those last-generation stocks that has toiled on for over a decade
to bring its once-revolutionary telomerase inhibitor imetelstat to the market. Imetelstat
now finally has a PDUFA on June 16, 2024, targeting lower risk myelodysplastic
syndromes. We were expecting a priority review because imet has a fast track
designation, however, the FDA didn’t think so [Note: Imet has fast track designations
for both the treatment of adult patients with transfusion dependent anemia due to Low
or Intermediate-1 risk MDS that is not associated with del(5q) who are refractory or
resistant to an erythropoiesis stimulating agent, and for adult patients with
Intermediate-2 or High-risk MF whose disease has relapsed after or is refractory to
janus associated kinase (JAK) inhibitor treatment]. In fact, there is also going to be an
advisory committee meeting before the PDUFA, so expect a lot of regulatory and KOL
clarity on this wonder drug by about May 16, 2024.
It is interesting that the FDA has asked for an adcomm for imetelstat. Imet is a new
molecule entity or NME, so a review of an NME needs clarity. The FDA often, but not
always, asks for an adcomm for NMEs. Below is a chart showing how many products
were approved by the FDA, how many of them were NMEs, and how many required
adcomms [thanks to SA user Trailblazer7 for this information]:
proedcomblog
Financials
In the last 10 years, about a third of all NMEs were preceded by an adcomm, and the
FDA generally, but not always, follows an adcomm suggestion. Therefore, it is not
going to be a straightforward approval for imetelstat, that’s for sure. Expect to be
surprised; I cannot say whether that is going to be a positive surprise or a negative
one.
In the wake of the FDA’s granting a standard review instead of a priority review, there
was a large selloff in GERN shares. The gains it made after submitting the marketing
application in June were completely eroded, and the upshot is that I am down 30%
after going up 30% at one point in my Geron career. Luckily, I have a strict policy of
profit-taking when I hit my first 30%, so I managed to take some money off the table.
Geron does have a high burn rate, so these 4 months of delay translates to quite a
few tens of millions of dollars in extra funds that they will need to spend. They do not
actually need extra cash before launch, but the CEO may just decide to do an
offering. I just hope it is from a position of strength.
CEO John Scarlett, the former CEO of Proteolix who joined Geron as CEO in 2011,
confirmed that they plan to launch imetelstat in H1 2024 itself, or within weeks of
approval. I noted earlier that they began hiring a marketing team back in January, and
their manufacturing is all figured out, so I guess an early launch is quite possible,
especially since nothing is early enough after a 33 year struggle to get its first drug to
the market.
Goldman Sachs’ analyst Corinne Jenkins thinks that imet will be approved in this first
indication, and has set a price target of $4. Ms Jenkins expects peak sales of $1.5bn
in this indication. She also says that the recent label expansion of Reblozyl in a first
line setting in anemia in adults with MDS will not hurt imet’s prospects, given its
second line setting. Thus, she considers the selloff a buying opportunity. I concur with
this opinion. Wedbush also calls this selloff a buying opportunity.
Bottom Line
About the TPT service
GERN has a market cap of $952mn and a cash balance of about $400mn. Research
and development expenses for the three months ended June 30, 2023, were $35.5
million, while general and administrative expenses were $16.5 million. Thus, they
spend around $50mn per quarter. At that rate, they have a clean 8 quarters of cash
runway, which gives them ample time to launch and start earning. I think, though, that
they will try to bring in some funds when the drug is approved. I think that implies a
dilution between now and approval.
Geron Corporation is a high risk-reward stock. I will hold on to my shares until
approval.

[biopearl123]

Thanks for posting Jayfish, considering we have heard plenty from KOLs already, virtually all of which has been positive, I think an ADCOM is a positive event and will give voice to patient advocates, patients and physicians. The costly delay foisted on Geron and patients is shameful. What could possibly be gained by damning with faint praise?

[kmall]

Not quite sure that the company still has $400M in cash? It's most likely about $300M or far less at this point. Don't have time to go back and look at specifics at the moment, but if they're spending $50M/quarter, which is actually quite frightening for a company with nothing to sell, and they had $400M back in January.....have they done another round of funding since then???

Honestly, I can't remember that either, since we've been hit over the head so many times with that one. If they haven't, then they're actually almost half way through the initial $400M this "article" refers to. I'm fairly certain that we're officially into Q4. - Kmall

[biopearl123]

You are totally right about cash burn.

[kmall]

Bp - I've noticed that quite a few who reference this company's finances are doing so with projections that were made many months before. In this case practically an entire year....almost 10 months as we stand today. It's really incredible to think that Geron is spending over $3.8M a week. Boggles the mind when you actually think about it for a second. They're not selling anything yet. That "article" is disconcerting from an investor standpoint. I'll leave it at that. -Kmall

[jayfish101]

Geron has consistently said they have enough cash on hand to get through to commercialization. I believe it was good through 2024, maybe 2025. I agree the article has a negative tone to it and it sites what I consider a ridiculously low price target of $4.00.

[biopearl123]

Jay, I think Geron optimistically thought they would get priority review and not incur and extra 60 M while waiting. That puts a big dent in any projections to which have been subjected. It seems that every time we are reassured there is enough money to get to X time, they raise.