Those following Geron (NASDAQ:GERN) are familiar with the clinical hold the FDA placed on Imetelstat due to consistent low level liver functional test (NYSE:LFT) abnormalities seen in patients exposed to the drug for an extended period of time in the Essential Thrombocythemia (NYSE:ET) trial. The FDA wants Geron to supply data on LFT follow-up and reversibility back to baseline after drug withdrawal. On March 18th I wrote an article detailing why I believe the FDA's clinical hold on Geron's Imetelstat will be temporary. Apparently, investors agreed and sent the stock soaring 40% that day. Since then the biotechnology index (NASDAQ:IBB) has dropped 10% in a broad sell off, severely punishing small cap stocks like Geron. After hitting $2.5 per share on March 18th, Geron has given back a significant portion of these gains on the broad sector pullback and short term profit takers on the quick Geron run up. The sharp pull back provides investors who can tolerate volatility another great opportunity to acquire Geron shares at a steep discount.
On March 20th the FDA announced they will now allow Myelofibrosis patients enrolled in a trial at the Mayo Clinic to remain on the drug if they are receiving a clinical benefit. As stated in my previous article, I did not think the FDA would pull patients off the drug who were responding as this would seem unethical. One has to remember, that the patients enrolled in the Myelofibrosis trial are Intermediate 2-risk and High Risk patients who have an average lifespan of 2.9 and 1.3 years respectively with most having failed other treatment regimens. The fact that Imetelstat treatment was able to produce an overall clinical response rate over 40%, including never before seen partial and complete responses, in these cohorts is remarkable. By allowing these patients to remain on Imetelstat, the FDA is agreeing that the benefits of responding to Imetelstat in Myelofibrosis outweighs the risk of any low level LFT abnormalities. This also allows the Mayo clinic to collect the necessary LFT follow-up data when the patients are removed from the drug in a clear and controlled manner. Dr. Tefferi from the Mayo Clinic has already stated he will work diligently with the FDA to remove the clinical hold.
As I stated in my previous article, it is highly likely the low level LFT abnormalities will be reversible just as the higher grade ones were on dose level modification in the ET trial. Regardless of the outcome of the Geron and Mayo clinic data on the reversibility of the LFT abnormalities, the fact that Geron has data that they don't progress or cause any issues after over 2.5 years on the drug is highly advantageous and something the FDA will look favorable upon. Due to the decision by the FDA to allow Myelofibrosis responders to continue treatment , I think it is pretty much a for sure bet the FDA will allow Geron to begin a trial to treat these more severe Myelofibrosis patients. However, if Geron can show the LFTs are reversible, then the trials would likely include all stages of Myelofibrosis. It should be noted that this is not the first time the Imetelstat trial has been put on hold. In late 2013, the FDA put the Imetelstat trial on full hold until some safety issues were explained further. The hold was lifted 2 weeks later.
One of the biggest benefits of Imetelstat is how fast patients typically respond to the drug. Most patients in the Mayo Myelofibrosis trial who responded to the drug had a clinical improvement by 12 weeks, with many responding in 3-6 weeks. Therefore, it would be possible after only a few doses of the drug (administered every 3 weeks) to determine if a patient will likely respond or not. This could be another method the FDA could use to allow the trial to continue but avoid unnecessary exposure to the drug for those that likely will not respond.
In summary, the FDA news allowing Myelofibrosis responders to continue drug treatment removes some of the risk to Geron investors and solidifies my position that the clinical hold will be temporary. In my opinion, as the clinical efficacy of Imetelstat has already been proven, the worst case scenario is that it will only be allowed to be used on late stage Myelofibrosis patients who have failed other treatments. Since other drugs on the market only slow the progression of the disease or treat the symptoms, most Myelofibrosis patients would likely end up on Imetelstat treatment at some point. With more of the risk removed, the stock should easily climb back to the $2.5-$3 range in the short term providing a nice return for investors. I continue to add on the pull backs.
Disclosure: I am long GERN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Continue to add to position