second part of SA article

[jayfish101]

Competition in MDS
To date, the standard protocol for the treatment of MDS is based on the use of ESA
(erythropoiesis-stimulating agents). In addition, the treatment involves blood transfusions which
may have serious contraindications due to iron overload.
We have seen in the previous paragraphs how the IMerge Phase 3 clinical study can act in terms
of transfusion independence and a potential positive modification of the disease.
These characteristics are highly differentiating compared to all the other products used and, to
date, there are no similar treatments (based on transfusion independence) on the market that
represent active competition.
Based on the estimates provided by Geron, the two studies, if approved by the regulatory
authorities, could each bring a contribution (Total Addressable Market) estimated at $3.5B in the
US and EU markets by 2031. The total market should therefore amount to $7B per 2031.
Geron Corporate Presentation - May 2024
These estimates come from specialized sector studies and refer to “DRG MDS Landscape and
Forecast data report” for LR-MDS and “DRG 2020 MF Niche & Rare Disease Landscape &
Forecast” for R/R. Since sector studies are independent and highly specialized in healthcare, I
believe they can be used for the subsequent analyses covered by this article.
Based on the estimates provided by Geron, I try to build an income statement model for the
period between 2025 and 2031 based on the following hypotheses:
1. Revenue growth
Geron will be able to acquire a maximum market share of 20% of the estimated TAM of $7B
in 2031: Geron's revenue in 2031 is estimated at $1.4B (=$7B X 20%)
Revenue is estimated at $175M in 2025 (= 5% of $3.5B) - it is assumed that the launch will
take place in 2024 and that in 2025 the company will be able to acquire at least 5% of the
total US market
In 2026 revenue will grow by a further 5% compared to the US TAM ($3.5M) and become
$350M
In 2027 US revenue remains unchanged ($350M) as the company focuses on EU revenue
which is estimated at $175M (5% of EU TAM - $3.5B) – Total US + EU revenue: $525M
From 2028 to 2031 revenue grows by 5% (on the TAM) every year until reaching the final
20% in 2031
2. Gross Profit: GP is estimated to be 56.82% of Revenue. This is the average GP figure for the
biotechnology industry. For example, in 2025 the estimated revenue of $175M generates a GP of
$99.4M (=$175M X 56.82%)
3. Other operating costs (R&D, G&A, and others): are estimated based on Geron's final figures
for 2023 and 2024 (FORM 10-K). For 2025 they are estimated at $316.1M based on 2024 costs
(FORM 10-Q - $56.4 in Q1-24 multiplied by 4 and an increase of 40% which is the rate of
increase in 2024 vs. 2023). Starting from 2025 these costs are estimated with an increase of 10%
each year because in 2025 the launch in the US is finished and the organizational structure for
the EU should have been fully implemented. For example, in 2026 operating expenses equal to
$347.7M are obtained from $316.1M X 110%.
The difference between the GP and the other costs generates the Net Profit. For example, in
2025 the Net Profit of ($216.6M) is obtained from the difference between the GP of $99.4M and
the other operating costs of $316.1M.
The total number of outstanding shares is estimated to be equal to the last one declared by Geron
in Q1-24 (Form 10-Q).
The EPS estimate is made by dividing the Net Profit by the number of outstanding shares. For
example, for 2028 EPS = $0.13 (=76.5/603.5)
The following table shows the result of the mathematical model built based on the above
hypotheses.
2025 2026 2027 2028 2029 2030 2031
Revenue 175 350 525 875 1050 1225 1400
GP 99.4 198.9 298.3 497.2 596.6 696.0 795.5
GP % 56.82% 56.82% 56.82% 56.82% 56.82% 56.82% 56.82%
Other operative expenses 316.1 347.7 382.4 420.7 462.7 509.0 559.9
Net Profit -216.6 -148.8 -84.1 76.5 133.9 187.0 235.6
Tot Share Outstanding 603.5 603.5 603.5 603.5 603.5 603.5 603.5
Basic EPS -0.36 -0.25 -0.14 0.13 0.22 0.31 0.39
We can see how, based on these assumptions, 2028 should be Geron's first year of positive profit
with an estimated EPS of $0.13.
The compound annual growth rate [CAGR] from 2028 ($0.13) to 2031 ($0.39) is 32.5%.
In my opinion, these hypotheses could best represent, based on the information in our possession
currently, the possible evolution of the business subject to approval by the competent regulatory
authorities.