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Geron Narrows Loss; Cuts Jobs

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Geron Corporation posted a net loss of 9 cents per share in the first quarter of 2013, wider than the Zacks Consensus Estimate of a loss of 8 cents but narrower than the year-ago loss of 15 cents. First quarter revenues of $765,000 were well below the year-ago revenues of $1.3 million and the Zacks Consensus Estimate of $1 million. A significant decline in expenses led to the narrower loss.

Quarter in Detail

Revenues consisted entirely of royalties and license fees. Total operating expenses declined 36.6% to $12.8 million. Research and development expenses declined 47% to $8 million due to reduced personnel-related costs and lower costs related to the manufacturing of imetelstat and GRN1005 as well as lower costs resulting from the winding-down of the imetelstat (metastatic breast cancer and advanced non-small cell lung cancer) and GRN1005 (brain metastases) studies. Meanwhile, general and administrative expenses declined 5.9% to $4.8 million, mainly due to lower personnel-related costs.

Update on Imetelstat

Geron also provided an update on its plans for pipeline candidate, imetelstat. Geron said that it intends to focus on developing imetelstat for hematologic myeloid malignancies and does not plan to study the candidate in non-small cell lung cancer with short telomeres or essential thrombocythemia (ET).

Geron said that it intends to discontinue its discovery research and companion diagnostics programs and will shut down its research laboratory facility. This will lead to workforce reduction of 20 positions. Although these steps will lead to cost savings in 2013, the company does not expect a significant impact on its operating budget as it will be incurring restructuring charges. The company also announced the departure of the Executive Vice President, Research & Development and Chief Medical Officer Stephen M. Kelsey, M.D., F.R.C.P., F.R.C.Path., effective May 3, 2013.

Meanwhile, Geron said that enrollment of the first cohort of patients in an investigator-sponsored study on imetelstat at Mayo Clinic for myelofibrosis (MF) was completed at the end of March. With pre-specified criteria in the clinical protocol being met, expanded enrollment should continue. Data from this study is slated to be presented later this year at the annual meeting of the American Society for Hematology. Positive data from this study would allow Geron to design and initiate a company-sponsored multi-center study in MF.

Other investigator-sponsored trials this year could be on hematologic myeloid indications like acute myelogenous leukemia and myelodysplastic syndromes.

Geron currently carries a Zacks Rank #2 (Buy). Companies that look better-positioned include Osiris Therapeutics , Athersys, Inc. (ATHX - Free Report) and Cleveland BioLabs, Inc. which are Zacks Rank #1 (Strong Buy) stocks.

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