Geron Corp: Why I Decided To Take A Flyer On This $2 Biotech Stock

| About: Geron Corporation (GERN)

Biotech stocks are probably the hardest to get a true handle on unless you have a P.H.D., a good research staff and more than a little luck. I think the best way to invest in the space is to select companies that seem to have significant promise, have the funding to last a few years and hope for the best. As long as you can make yourself comfortable with the notion that for every 5 stocks you invest in, one or two will go bankrupt, one will muddle along, one will be a slight success and the last one will be a ten bagger. One stock I am comfortable throwing into the mix at these price levels is Geron Corporation (NASDAQ:GERN).

According to Yahoo Finance, "Geron Corporation, a biopharmaceutical company, develops biopharmaceuticals for the treatment of cancer and chronic degenerative diseases, including spinal cord injury, heart failure, and diabetes."

7 Reasons to take a flyer on Geron at $2 a share:

  • Its pipeline of oncology drugs is promising. It has one drug, imetelstat, that is in several clinical trials. A breast cancer treatment just completed enrollment into phase II trials.
  • It has approximately $140mm in net cash on its balance sheet. It is bleeding about $40mm to $45mm a year in operating cash flow so it has over three years of funding at current run rates.
  • Insiders have been net insider buyers of the stock over the last six months.
  • The median price target on Geron for the 4 analysts that cover the company is $6, triple its current price.
  • Although sales are small, revenues are projected to grow 80% in FY2012.
  • The stock looks like it has bottomed and just crossed over its 100 moving day average.

click to enlarge

  • The CEO is presenting at 2012 Global Health Care Conference in New York City at the end of the month which should generate positive buzz for the stock.

Disclosure: I am long GERN.