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Geron (GERN) Q3 Earnings Beat Estimates, Stock Gains 4.1%

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Geron Corporation (GERN - Free Report) incurred a loss of 8 cents per share in third-quarter 2019, narrower than the Zacks Consensus Estimate of a loss of 14 cents. In the year-ago quarter, the company had incurred a loss of 3 cents per share.

Quarterly revenues came in at $0.13 million, slightly beating the Zacks Consensus Estimate of $0.1 million. Notably, the top line comprised royalty and license fee revenues received under various non-imetelstat license agreements. In the year-ago quarter, revenues totaled $0.17 million. The top line declined as the number of active license agreements fell due to expiry of patents of Geron’s underlying technology.

Shares of Geron were up almost 4.1% in afterhours trading on Nov 6, following the earnings release. So far this year, the stock has gained 45% compared with the industry’s 0.9% increase.

R&D expenses were $11.1 million compared with $2.7 million in the year-ago quarter. Transition costs, including resuming sponsorship of imetelstat clinical studies from J&J (JNJ - Free Report) , costs related to start-up of phase III portion of the IMerge study (evaluating imetelstat in myelodysplastic syndromes) and expansion of development team, resulted in significantly higher R&D expenses.

General and administrative expenses rose 16.3% to $5 million, reflecting legal costs related to patent litigations and recruitment expenses for additional headcounts.

Geron ended the third quarter with $159.3 million in cash and investments compared with $162.3 million at the end of the second quarter.

2019 Guidance Maintained

Geron reiterated its outlook for 2019. The company expects full-year operating expenses to lie in the range of $80-$85 million. This includes one-time cost of $20-$25 million related to activities for transition of imetelstat from Janssen to Geron, and purchase of material for the phase III portion of IMerge study.

Pipeline Update

Following the termination of the agreement with Janssen, a subsidiary of J&J, in September 2018, Geron regained global development rights to imetelstat and decided to continue developing imetelstat independently. The transition activities, including ex-U.S. clinical and regulatory responsibilities, were completed in the third quarter.

Geron assumed sponsorship of the investigational new drug application for imetelstat in May this year. In October, the company initiated dosing in the phase III study, IMerge, in patients who have not received prior treatment with hypomethylating agents and lenalidomide. The company is anticipating top-line data from the study in mid-2022.

Another phase II study – IMbark – is evaluating imetelstat in myelofibrosis patients whose disease relapsed afteror is refractory to a treatment with JAK inhibitor. In December, Geron presented updated median overall survival (OS) data from the higher dosage arm (9.4 mg/kg) of the study. The candidate achieved median OS of 29.9 months, which suggests a meaningful survival outcome. The company is planning to conduct an end of phase II meeting with the FDA by the end of first-quarter 2020. Following the meeting, it will decide upon potential late-stage development of the candidate. In September, the FDA granted Fast Track designation to the candidate for treating myelofibrosis.

Geron Corporation Price, Consensus and EPS Surprise

 

Geron Corporation Price, Consensus and EPS Surprise

Geron Corporation price-consensus-eps-surprise-chart | Geron Corporation Quote

Zacks Rank & Stocks to Consider

Geron currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks from the biotech sector are Vertex Pharmaceuticals Incorporated (VRTX - Free Report) and Acorda Therapeutics, Inc. (ACOR - Free Report) . Both stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Vertex’s earnings estimates have moved up from $4.58 to $4.79 for 2019 and from $6.03 to $6.62 for 2020 in the past 30 days. The company delivered a positive earnings surprise in all the trailing four quarters, with the average beat being 17.59%. Share price of the company has increased 19% so far this year.

Loss estimates for Acorda have narrowed from $2.98 to $2.18 for 2019, and from $3.74 to $1.95 for 2020 in the past 30 days. The company pulled off a positive earnings surprise in all the last four quarters, with the average beat being 68.8%.

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