The shares of Geron Corporation (GERN) witnessed a quite interesting rise and fall, following the release of its imetelstat, myelofibrosis drug data. The shares of the company rose as much as 16% after hours while the American Society of Hematology (ASH) presentation was underway, which was focused on imetelstat and its results. However, soon after the positive results the company's shares fell 6.70% on December 10, primarily due to investors selling on news. In my previous report on Geron, I had advised investors to prepare for some major upcoming catalyst.
The company recently presented the results of its phase I investigator sponsored trail of imetelstat. The first 22 patients' data, with Arm A (n=11) taking 9.4 mg/kg every 3 weeks and Arm B (n=11) taking 9.4 mg/kg weekly cycle 1, then every 3 weeks, suggests that the drug demonstrated disease modifying activity in myelofibrosis. The results showed unprecedented remissions (CR+PR) in 5 out of 22 patients, clinical improvement (CI) in 4 out of 22 patients, and overall response (CR+PR+CI) in 9 out of 22 patients (40.9%), meeting the study endpoints. Additionally, in the patients with CR+PR patients 4 out 5 showed bone marrow reversal; all 3 patients witnessed resolution of symptoms; and all resolution of splenomegaly in all 4 patients. Furthermore, the patients with overall response didn't lose their response to date. The study also reported clinical benefits including resolution of circulating blasts, leukocytosis, and thrombocytosis.
The safety results in the first 33 patients enrolled, Arm A (n=19) and Arm B (n=14), were observed in 7 months follow up. Among the 33 patients, 73% (24) are still on treatment, 36% (12) had their dose reduced, and 27% (9) discontinued treatment - 6 patients due to lack of response, 1 due to transformation in CMML, and 2 due to related and unrelated death. The treatment related toxicity observed included nausea (15%), vomiting (3%), fatigue (12%), hyperbilirubinemia (6%), and APTT increase (3%). The myelosuppression related toxicity included grade 3/4 and grade 4 neutropenia (21%, 12%), grade 3/4 and 4 thrombocytopenia (30%, 15%), anemia (12%), and grade 5 CNS bleed and febrile neutropenia (3%).
The company was recently upgraded by Needham and Company, based on the positive trial results. They have upgraded the stock from a hold to a Buy, with a price target of $10. They earlier held that the investors should be cautious with Geron before the release of the myelofibrosis data, however following the release they now term the data robust and that it exceeds expectations. They further believe in imetelstat having blockbuster potential, being the first treatment that has the potential to generate treatment response.
Additionally, MLV & Co. also raised their price target from $8 to $9, maintaining the Buy rating. Now the company has a total of four analysts rating it a buy and three rating it a hold, with an average price target of $6.63. The highest price target is $10 by Needham and Company and the lowest target is $4 by Piper Jaffray. Currently the company is trading at $5.15, as on December 10.
The imetelstat data has shown higher response and complete remission when compared to the other competitive drugs like Incyte's Jakafi. The trial despite being early stage is reason enough to watch out for this drug, since it provides better clinical benefits compared to other drugs. The drug if and when approved is touted to provide better treatment then the other JAK-inhibitors already in the market or under development. Furthermore, if the company shows similar or better results in its future trials, there is a chance that it may be approved on an accelerated basis by the FDA. However, the death event related to complications of imetelstat in a small number of patients is worrying.
One thing to note here, as previously mentioned, the cash position of the company, it currently has a little less than $66.21 million. The company expects to begin Geron sponsored phase II studies in the first half of 2014, and thus will definitely be in need of additional funds, and is expected to turn towards equity financing. Even though the cash is important for the company, but the financing will have a dilutive impact on the shares, and the prices will slip.
Consistent with my previous assessment I believe Imetelstat has the potential to not only help the myelofibrosis patients substantially, but also Geron in becoming a profitable company. The drug indeed has blockbuster potential, given that the future trials are positive and there are minimal complications. The recent negative market reaction following the trail results is an instance of selling on good news; however some believe that the results are inconclusive because of small patient population.
The company is also expected to provide an update to the investors in the first quarter of 2014, regarding the development path of its candidate. Thus, the company in my opinion is a good long-term investment, but not for those faint-at-heart, because the share prices will remain volatile over an extended period and will also fall once the company raises funds through offering.