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Geron Hit by Pipeline Setback

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Geron Corporation shares fell more than 50% following the company’s announcement regarding the discontinuation of a phase II study (breast cancer) being conducted with oncology candidate, imetelstat. Moreover, the company said that chances of imetelstat achieving its primary endpoint in a non-small cell lung cancer (NSCLC) study are pretty low.

Imetelstat is being evaluated in two more studies for essential thrombocythemia and multiple myeloma.

The discontinued study was being conducted in metastatic HER2-negative breast cancer patients who were randomized to receive imetelstat plus paclitaxel or paclitaxel alone.

A scheduled periodic review by Geron`s Internal Safety Monitoring Committee showed that the number of deaths and patients discontinuing paclitaxel in the imetelstat arm was higher compared to the control arm. As a result, the company decided to conduct an unplanned interim analysis of efficacy which showed that median progression-free survival (PFS) in the imetelstat arm was lower compared to the paclitaxel arm (6.2 months versus 8.0 months).

While the number of deaths in the imetelstat arm (16 versus 10) was higher, difference in overall survival was not statistically significant. Based on all these findings, Geron decided to discontinue the study.

Geron noted that the study protocol allowed for a reduction or delay in paclitaxel dosing. The company said that a series of analyses indicated that the reduction in paclitaxel dosing could have been responsible for the PFS data.

In order to further investigate this possibility, Geron conducted an unplanned interim safety and efficacy analysis of the ongoing randomized phase II study in NSCLC patients. Imetelstat is being evaluated as a single agent (maintenance treatment following platinum-based induction chemotherapy) compared to observation in this study. Patients in this study are receiving a higher and more frequent dose of imetelstat compared to the HER2-negative metastatic breast cancer study.

The interim analysis showed that median PFS was in favor of the imetelstat arm (2.8 months versus 2.6 months) compared to the observation-only arm. However, the difference was not statistically significant.

Importantly, the company said that there was no indication that imetelstat may be responsible for accelerating disease progression. Although the company is continuing with the NSCLC study, it does not expect the study to achieve the pre-specified success criteria. As a result, the company does not expect to move imetelstat into phase III studies for the NSCLC indication unless subsequent analysis shows significantly different data.

As far as the hematologic malignancy studies are concerned, Geron will continue with these studies. Results from these studies should be out in the fourth quarter of 2012.

Our Take

The discontinuation of imetelstat for breast cancer and the low chances of moving the candidate into phase III development for NSCLC is a major setback for Geron. Geron, which was previously a leader in stem cell research, had shifted its focus to oncology less than a year back.

Geron’s pipeline consists of two candidates – imetelstat and GRN1005. Given the imetelstat update, we have low expectations from this candidate and expect investor focus to shift entirely to GRN1005 which is currently in phase II studies for brain metastases arising from non-small cell lung cancer and breast cancer.

The company expects to present interim data from the GRN1005 breast cancer trial (GRABM-B) in early December.

We prefer to remain on the sidelines until we see data on GRN1005. We currently have a Neutral recommendation on Geron, which carries a Zacks #3 Rank (short-term Hold rating).

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