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Geron Stock Up Almost 40% So Far This Year After '16 Decline

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Geron Corporation’s(GERN - Free Report) shares have risen 38.7% this year so far, outperforming the Zacks classified Medical - Biomedical and Genetics industry, which rose 5.6%. This comes after a decline of more than 57% in 2016.

The small biotech has been making rapid advances in the development of its only pipeline candidate imetelstat, which has been instrumental in driving up shares.

Imetelstat is being developed for the treatment of hematologic myeloid malignancies like myelofibrosis (MF) and myelodysplastic syndromes (MDS). Geron enjoys a strong collaboration with Johnson & Johnson’s (JNJ - Free Report) subsidiary Janssen for imetelstat.

Imetelstat Out of the Woods Now: In 2016, J&J announced unfavorable findings from the planned internal reviews of initial data from the two studies of imetelstat – IMbark (phase II) for MF and IMerge (phase II/III) for MDS.

However, in April this year, Geron informed that Janssen has completed the second internal data review of the two studies to inform on further development plans. As a result of the review, both trials are continuing unmodified. Shares picked up significantly after the interim update.

For IMerge, the company believes that the benefit/risk profile supports continued development. If Janssen decides to proceed to Part 2 of IMerge (a larger, 170 patient, phase III study), patient enrollment will begin in the fourth quarter of this year.

For IMbark, the results suggest that the clinical benefit and potential overall survival benefit observed supports continuation of the trial without modifications. However, Janssen will evaluate maturing data from the IMbark study next year, including an assessment of overall survival.

We remind investors that imetelstat has orphan drug status in the U.S. for the MF and MDS indications.

Meanwhile, there are many other factors, which attract investor attention to the stock. These include:

Telomerase Technology Platform Represents Significant Opportunity: The company’s telomerase technology platform represents significant commercial opportunity. Geron is developing anti-cancer therapies based on telomerase inhibitors. The successful development of products that target telomeres could change the treatment paradigm for several diseases, including oncology, which exhibits huge commercial potential.

A Strong Partner in J&J: Geron has a strong partner in J&J and provides funds as well. The exclusive worldwide license and collaboration agreement provided Geron with an initial payment of $35 million. The company could receive up to an additional $900 million on the achievement of development, regulatory and commercial milestones. Geron will also be entitled to royalties on worldwide net sales.

Favorable Rank & Estimate Revisions: Geron has a Zacks Rank #2 (Buy). Loss estimates have narrowed 80% for 2017. For 2018, estimates have gone up from breakeven to 2 cents per share over the past 60 days. The average earnings surprise over the past four quarters is 27.98%. The Zacks Consensus Estimate reflects sales growth rate of 247.8% and 191.4% for 2017 and 2018, respectively. For earnings, the growth rates are 92.1% for 2017 and 211.1% for 2018.

Other stocks worth considering in the sector include Aduro BioTech, Inc. and Agenus Inc. (AGEN - Free Report) , both carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Aduro BioTech’ loss per share estimates narrowed 9.3% for 2017 in the last 60 days. The company delivered a trailing four-quarter average positive earnings surprise of 36.28% Shares have increased 18.2% in the past three months.

Agenus delivered a trailing four-quarter average positive earnings surprise of 8.8%. Shares of Agenus have risen19.4% in the past three months.

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