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Summary

  • The FDA has put imetelstat, the only pipeline candidate of the company, on a clinical hold, which means the company is now barred from initiating a study on the drug.
  • Geron is yet to receive the formal letter after which the company will study FDA’s concerns contained therein and then formulate a response after going through the trial data.
  • The company now has a problem at hand that is much more serious than funding and share dilution. However things could change for the better.

In my earlier article on Geron (NASDAQ:GERN) I had argued that going forward, shortage of funds could be an issue with the company and it might have to offer more common stock as it would be difficult to find a partner on the basis of Phase I trial of its investigational new drug ('IND).

I was wrong - and rightly so was pulled up for that - because I had ignored the public offering that the company was able to complete within a few days in late January 2014, demonstrating acute institutional interest. The company however has a bigger problem now. The FDA has put imetelstat, the only pipeline candidate of the company, on a clinical hold.

FDA's action

On March 12, 2014, the company announced that the FDA had informed it verbally that imetelstat has been placed on full clinical hold. A full clinical hold means that the company is now barred from initiating a study on the drug. The notice applies to all ongoing studies sponsored by Geron.

In the verbal notice the FDA has indicated that the clinical hold was due to liver function test ('LFT) abnormalities observed in Phase II studies of essential thrombocythemia ('ET).

Imetelstat studies

Geron was studying Imetelstat, a first-in-class telomerase inhibitor, for treatment of ET and myelofibrosis. Proof of concept in ET was established in 2011 and an investigator sponsored trial for evaluation of imetelstat in myelofibrosis was initiated by Dr. Ayalew Tefferi at Mayo Clinic. The company was taking forward its development process in a company sponsored Phase II trial of Imetelstat in myelofibrosis patients.

All this has now been put on hold.

What does this mean?

Such events are a major risk and the reason why investments in development stage biotech companies are said to carry a binary risk - it is either your way or nothing.

On one side it can be argued that this is not the first time a drug candidate has been put on hold. Once the formal letter is received, the company will study FDA's concerns contained therein and then formulate a response after going through the trial data. The FDA is concerned about persistent low grade LFT abnormalities and as the President and Chief Executive Officer, Director of the company, John A. Scarlett M.D., said in a conference call on imetelstat, it may not be about acute abnormalities. He also said that as of today there is absence of full information and data on what happens when the patient's dose is reduced to zero.

In simple words, things could change for the better.

On the other hand, this is not the first time that this has happened with the drug. Earlier also, Geron had to stop testing imetelstat for breast cancer and non-small cell lung cancers. Even in the ongoing studies, 25% of the patients enrolled for the study dropped out. Although not an aberration, this could be an issue going forward.

Final word

All said and done this is a major setback for the company and its stock price. The stock tanked more than 60% on the day the information was released. However, the stock recovered 5.62% the next day.

It is not fully certain whether imetelstat studies will resume in the near future or at all. On an optimistic note, it can also be said that the imetelstat studies may resume within a reasonable timeframe. However, LFT abnormalities will continue to be an issue, which would have an adverse impact, which could prove to be a hurdle in exploiting the full commercial potential of the drug.

Source: Should You Still Buy Geron?