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Geron Corporation (GERN - Analyst Report) posted a net loss of 10 cents per share in the fourth quarter of 2012, narrower than the Zacks Consensus Estimate of a loss of 14 cents and the year-ago loss of 20 cents. Fourth quarter revenues of $689,000 were well above the year-ago revenues of $251,000 but below the Zacks Consensus Estimate of $1 million. A significant decline in expenses led to the narrower loss.

Full-year loss came in at 52 cents per share, well below the year-ago loss of 72 cents per share and the Zacks Consensus Estimate of a loss of 60 cents. Full year revenues increased 11.1% to $2.7 million.

Quarter in Detail

Revenues consisted entirely of royalties and license fees. Geron has several license agreements with various oncology, diagnostics, research tools, agriculture and biologics production companies. Geron did not recognize any revenues from collaborative agreements in the reported quarter.

Total operating expenses declined 34.7% to $16.5 million. Research and development expenses declined 40% to $11.8 million due to reduced personnel-related costs and lower scientific supply expenses resulting from the discontinuation of the stem cell programs as well as lower costs related to the manufacturing of imetelstat. Meanwhile, general and administrative expenses declined 15.7% to $4.7 million, mainly due to lower stock-based compensation expense.

Earlier this year, Geron had announced that it has signed an Asset Contribution Agreement with BioTime, Inc. and its subsidiary, BioTime Acquisition Corporation (BAC). Per the terms of the agreement, Geron’s stem cell assets will be divested to BAC on the closing of the deal. The deal is scheduled to close by Sep 30, 2013.

During 2013, Geron expects cash burn of about $33 million, well below the 2012 burn rate. In Dec 2012, Geron had announced positive phase II data on pipeline candidate, imetelstat, for essential thrombocythemia (ET). Rapid and durable hematologic and molecular responses were observed in patients on imetelstat. The company is currently working with advisers to see whether imetelstat has the potential to be developed for ET.

Meanwhile, Geron expects to report full results on imetelstat, for multiple myeloma this year. However, the company said that the further development of imetelstat in lymphoid malignancies remains a low priority area. Moreover, Geron does not have any plans for the further development of imetelstat for multiple myeloma.

Geron currently carries a Zacks Rank #3 (Hold). We prefer to remain on the sidelines until we gain more visibility on the late-stage development potential of imetelstat. Companies like Cytokinetics (CYTK - Snapshot Report) and Osiris Therapeutics (OSIR - Analyst Report) currently look more attractive. Both are Zacks Rank #1 stocks (Strong Buy).

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