Geron Corporation (NASDAQ: GERN), a biotech superstar, has been in the news lately — and for good reason. Investors flocked to Geron in anticipation of its upcoming earnings announcement. The influx of money sent Geron’s stock soaring more than 10 percent in a single day earlier this week. All in all, the company’s stock has increased by 70 percent since the beginning of the year.
Let’s take a deeper look at Geron, and determine whether or not the stock is worth your hard-earned cash.
The Argument for Geron
At this point, many investors might be hesitant to plunk down any money in Geron simply because of the stock’s meteoric rise. When stocks rapidly increase in a fairly short period of time, the general sentiment is it is prudent to sell at least a portion of your shares to avoid the seemingly inevitable profit-taking. However, those who own Geron and those who are interested in buying the stock should be aware of the company’s latest telomerase inhibitor known as imetelstat. This potentially breakthrough inhibitor is nearing its third internal review for the continuing trials for blood disorders.
The date of imetelstat’s release has not been publicized yet investors have dumped copious amounts of money into the stock in anticipation of the telomerase inhibitor’s debut. There is plenty of talk that Geron executives will soon go public with in-depth information about their work with Johnson & Johnson on this breakthrough offering. As of today, Geron’s leaders have maintained a veil of secrecy about collaboration with this corporate titan. Geron bulls believe the two companies will release a major clinical update fairly soon.
Geron’s History
Geron’s fourth quarter results left plenty to be desired. The company endured a loss of five cents per share in the quarter. This loss proved quite underwhelming to investors and analysts alike. The consensus from Zacks was Geron would lose four cents per share.
Though the company’s earnings per share in the fourth quarter of ’17 were certainly disappointing, it is worth noting quarterly revenues increased more than 100 percent from the same quarter a year ago. Geron bears argue this increase is tempered by the fact that quarterly revenue disappointed. The company did not even bring a million dollars of revenue in the quarter. Geron revenues stem from license and royalty fees received through agreements unrelated to the company’s pending imetelstat offering.
Can Imetelstat Push Geron to new Heights?
If Geron is to become a true power player, its lone “pipeline” project, imetelstat, must prove uber-successful. Imetelstat is currently under evaluation in a couple studies known as IMbark and IMerge. As noted above, these studies are being performed in collaboration with Johnson & Johnson. A couple month ago, Geron executives released data from the initial IMerge study. The data showed imetelstat was effective so Johnson and Johnson extended the study to additional patients. Indeed, the clinical benefit as well as the safety observed during the initial study had merit. The Food and Drug Administration (FDA), has provided the “fast track” designation for imetelstat.
Buy, Sell or Hold?
Geron has skyrocketed in value based hope. Though the company might not ever create a highly effective cancer therapy, the mere potential for such a therapy will always intrigue investors. The company certainly is making headway in treatment for those suffering from myelofibrosis. Furthermore, the fact that Geron has partnered with Johnson & Johnson has made investors quite optimistic. Those who are bullish about Geron should not lose sight of the fact that the company lost nearly $28 million last year.
There is a question as to whether Johnson & Johnson will maintain imetelstat’s license rights and push forward with development efforts. There is certainly a chance this healthcare stalwart will exit the partnership. Those who follow Johnson & Johnson closely know the company is expanding its oncology department. This is an excellent sign for Geron. It is expected Johnson & Johnson will decide whether to continue developing imetelstat by autumn of this year.
The bottom line is an investment in Geron is more of an investment in a couple potential medical solutions rather than an investment in a massive corporate enterprise with proven money-makers. In other words, buyer beware. This is a risky investment that will likely prove quite volatile in the days, weeks and months to come.
If you own Geron, consider taking a portion of your profits off the table. Those who are interested in Geron will likely be best served by sitting on the sidelines until more information is revealed about how Johnson & Johnson will proceed with imetelstat.
Regards,
Ethan Warrick
Editor
Wealth Authority
