part three of SA article

[jayfish101]

Regarding the duration of the patents and rights on Imetelstat, Geron owns the patents issued in
the US and EU, which cover the company's rights until 2033 on MDS and MF treatments. This
coverage could guarantee the implementation of the economic plan set out above without the
revenue being affected by external factors.
Share Price Valuation
Geron Corporate Presentation - May 2024
Based on the calculation and estimation hypotheses of future EPS, it is possible to set an
estimate of the future share price, determining the potential profit in the event of an investment
today.
In the previous paragraph, we calculated an estimate of EPS for the years from 2028 to 2031 and
based on these calculations the EPS CAGR is 32.5% on an annual basis. In 2031, Revenue
growth should have reached its maximum peak and therefore EPS growth should also stop. But
from that date onwards, other business may likely develop within the company, which cannot
currently be foreseen.
To estimate the share price, we could use a formula by popular investor Benjamin Graham:
Intrinsic value per share = EPS x (8.5 + 2 g)
Where
EPS = earnings per share
g = EPS growth rate = 32.5%
How Hedge Funds are moving
Author Calculation
Example of calculation for 2028:
Intrinsic value per share = EPS x (8.5 + 2 g) = 0.13x(8.5+2x32.5) = $9.55
Based on these assessments, we can hypothesize a possible return on the investment in Geron
made in 2024 at the price of $3.7 equal to 158% in 4 years (in 2028 the price could reach $9.55).
The following graph shows the number of hedge funds that have invested in Geron. We can see
that in Q1-24 there are 29 funds in the shareholding structure and this is not only the highest
number ever since 2013 but also represents a 50% increase when compared with the average
number for 2023.
It would therefore appear that hedge fund managers are believing in Geron much more than in
the last 10 years, and this could represent a further element of support in my investment thesis in
the company.
Financials
Insider Monkey
Geron's latest Form 10-Q identifies that the company has approximately $465M in cash and
marketable securities (this includes the latest public offerings of common stock and warrants)
As regards operating costs, as we can read in the latest earnings call:
Our projected full-year 2024 operating expenses are expected to be between $270 million and
$280 million.
2023 ended with a final operating cost of $194M, so the difference compared to the worst
estimate for 2024 is $86M, which also represents a further net loss in 2024 compared to 2023. If
the net loss in 2023 is amounted to ($184M) we can hypothesize that in 2024 the net loss could
reach ($270M)
Risks
Bottom line
2025 should be the first year of business growth in terms of revenue and according to the
economic model created in the previous paragraph, the net loss should be approximately
($216.6M)
The net loss for 2024 and 2025 is therefore expected to be ($486M). Considering that the cash of
$465M refers to the end of Q1-24 we can identify that the business can continue without financial
problems until Q1 2026.
In 2025, in my opinion, the company will therefore once again be committed to raising funds to
guarantee business continuity for 2026 and probably for 2027.
As has happened in past years, a possible injection of new funds into the company should not
represent a binding problem, and therefore I believe that the business will be able to continue its
growth without problems. The investment in Geron made today can potentially guarantee an
advantageous entry price compared to what it could be after June 16th, when the FDA may have
approved the NDA.
Geron's business is based on a single product, Imetelstat and this represents an obvious risk of
lack of diversification. Should Imetelstat run into problems of any kind, there are no second-choice
alternatives or possibilities: everything is based on a single candidate. This represents an element
of risk for any company and especially for Geron when the product has not yet entered the
marketing phase.
Although I believe it is likely that the FDA could approve Imetelstat, what could represent an
additional element of risk is related to the timing of approval. There could be delays of any kind
due to any new additional requests from the FDA or to operational elements relating to the launch
of the product on the market. A possible delay in the launch of Imetelstat would imply a significant
increase in costs and a possible collapse in the share price.
The IMpactMF clinical study represents another element of high risk: if this were to fail to
demonstrate efficacy and safety for patients, then also in this case 50% of the estimated future
revenue would be totally at risk and could also jeopardize the business continuity.
This article was written by
Michele Pagliaro