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Analyst Blog

Geron Corporation (GERN - Free Report) reported a loss of 2 cents per share in the third quarter of 2016 narrower than the Zacks Consensus Estimate of a loss of 6 cents. The company had reported earnings of 17 cents in the year-ago quarter.

Quarterly revenues came in at $5.1 million, compared with $35.4 million in the year-ago quarter, which included an upfront payment from Johnson & Johnson’s (JNJ - Free Report) Janssen Biotech related to its collaboration agreement for imetelstat. Revenues, however, surpassed the Zacks Consensus Estimate of $0.2 million.

Revenues included royalty and license fees under various non-imetelstat agreements.

Research and development (R&D) expenses increased 4.9% to $4.3 million, reflecting higher costs for the company's proportionate share of development expenses under the imetelstat collaboration with Janssen Biotech, partially offset by lower personnel-related costs due to the Mar 2015 organizational resizing and lower costs of manufacturing imetelstat.

General and administrative expenses increased 9.3% to $4.7 million, reflecting higher non-cash stock-based compensation expense, and increased allocation of facilities and other overhead costs to general and administrative activities.

Pipeline Update

In the third quarter, the company announced unfavorable findings from the planned internal reviews of initial data from the two studies – IMbark (phase II) for the treatment of myelofibrosis, and IMerge (phase II/III) for the treatment of myelodysplastic syndromes.

Findings concluded that clinical activity of imetelstat in the 4.7 mg/kg dosing arm in the IMbark study did not warrant any further investigation and the study will thus be closed to new patient enrollment. The company, however, is still evaluating imetelstat in the 9.4 mg/kg dosing arm.

On the other hand, an internal review of the part I of the IMerge study on imetelstat showed similar safety and efficacy data as the pilot study conducted on the candidate at the Mayo Clinic.

Further assessment of data from both the studies is expected by the end of second-quarter 2017.

Meanwhile, Geron is working on expanding its pipeline and is simultaneously working to add oncology candidates, programs or companies to its portfolio.

GERON CORP Price, Consensus and EPS Surprise

 

GERON CORP Price, Consensus and EPS Surprise | GERON CORP Quote

We are positive on Geron's agreement with Johnson & Johnson which provides it with a strong partner as well as funds. The company’s growth prospects currently depend entirely on the successful development of imetelstat, which is its sole pipeline candidate. Investors are expected to focus on further updates related to imetelstat and business development, going forward.

Zacks Rank & Key Picks

Geron is a Zacks Rank #2 (Buy) stock. A couple of other favorably placed ranked stocks in the healthcare sector are Infinity Pharmaceuticals, Inc. (INFI - Free Report) and Exelixis, Inc. (EXEL - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Infinity’s loss estimates narrowed from $3.84 to $3.79 for 2016 but remained unchanged for 2017 over the last 60 days. The company has posted a positive surprise in all of the four trailing quarters with an average beat of 67.62%.

Exelixis’ loss estimates narrowed from 71 cents to 61 cents for 2016 and from 16 cents to earnings of 4 cents for 2017 over the last 60 days. The company has posted a positive surprise twice in the four trailing quarters with an average beat of 9.1%.

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