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Why Is Geron (GERN) Down 22% Since Last Earnings Report?

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A month has gone by since the last earnings report for Geron (GERN - Free Report) . Shares have lost about 22% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Geron due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Geron’s Q1 Earnings Beat, Revenues Miss

Geron incurred a loss of 5 cents per share in first-quarter 2019, narrower than the Zacks Consensus Estimate of a loss of 6 cents. In the year-ago quarter, the company had incurred a loss of 4 cents per share.

Quarterly revenues during the quarter came in at $0.06 million, which missed the Zacks Consensus Estimate of $0.21 million. Revenues comprised royalty and license fee revenues received under various non-imetelstat license agreements. Revenues in the year-ago quarter were $0.32 million. Revenues declined as active license agreements reduced due to expiry of patents of Geron’s underlying technology.

Research and development (R&D) expense increased 145% year over year to $5.9 million. Following the termination of collaboration with Janssen, a subsidiary of J&J for imetelstat development, Geron bore full development cost that was earlier shared equally with Janssen. This led to a significant increase in R&D expenses.

General and administrative (G&A) expenses rose 3.6% to $5.5 million, reflecting recruitment expenses for new board members.

Geron ended the quarter with $170 million in cash and investments compared with $182 million at the end of the fourth quarter.

2019 Guidance

Geron increased its guidance for operating expenses to the range of $80-$85 million in 2019 from the previously guided range of $65-$70 million. This will include $20 million to $25 million in one-time costs related to transition of imetestat and transfer of investigational new drug (IND) sponsorship from Janssen to Geron among others. Geron is also planning to expand its development team for imtelstat

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, Geron has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Geron has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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