As I Predicted, Cash-Rich Geron Optimizes Dosage In Myelofibrosis Trial

| About: Geron Corporation (GERN)

Summary

Geron Moves Low Dosage Arm To Optimal Dosage Level in IMbark Myelofibrosis Study.

Encouraging Trends Have Been Disclosed For Both IMbark (Myelofibrosis) and IMerge (MDS) Studies.

Likelihood of Breakthrough Therapy Designation Has Now Increased.

Geron's $130MM Cash Hoard and Low Burn Rate Make This a No-Brainer for Biotech Investors.

The Best News in This Early Look at Geron's Imetelstat Trials May Be That There Are No New Safety Concerns.

Geron Moves Low Dosage Arm To Optimal Dosage Level in IMbark Study

As I predicted in my previous article, Geron (NASDAQ:GERN) has moved the Imetelstat low dose 4.7mg/kg arm 1 of its IMbark Myelofibrosis Study to the optimal 9.4mg/kg dosage in arm2. Without rehashing all my points in my previous article, this sets the stage nicely for a more robust trial success possibly leading to breakthrough therapy designation for the drug. The 12-week review disclosed last week was solely intended to determine dosage adjustment or refinement in the study.

Encouraging Trends Have Been Disclosed For Both IMbark and IMerge Studies

Investors, however, were treated with an extra bit of positive news that got lost in the fog of analyst and stock pundit misinterpretation of the press release. Both the 9.4mg/kg arm 2 in the IMbark trial, as well as the IMerge/MDS trial are showing encouraging trends very early in the trial. As Anna Krassowska (Geron Investor Relations) indicated in an email to SA commenter "nosy" in response to his inquiry, "Note that clinical trials of other agents tested in myelofibrosis report data at 24 or 48 weeks and not 12.5."

Likelihood of Breakthrough Therapy Designation Has Now Increased

With the entire patient population in the IMbark trial now on the previously observed optimal dosage, the actual quantity of Complete and Partial remissions will begin piling up and in turn bolster the chances for a BTD (Breakthrough Therapy Designation). The IMerge (MDS) trial, which is also showing positive trends, may actually read out first with the possibility of approval with previously observed success rate in this hard-to-treat condition.

Geron's $130MM Cash Hoard and Low Burn Rate Make This a No-Brainer for Biotech Investors

As of June 30th, Geron reported a robust $136MM hoard of cash and marketable securities. This is quite substantial when compared to the very low current $5.5MM per quarter cash burn rate. The company's restructuring in March set the stage for the very favorable fiscal status the company finds itself in at the moment. Even assuming the anticipated combination trial for AML started this year, the collaboration agreement with Johnson & Johnson's (NYSE:JNJ) Janssen unit ensures any cash burn increase will be modest. This provides Geron with many years of cash cushion assuming they don't make a major acquisition before next year's anticipated JNJ opt-in decision and contractually required milestone payment to Geron of $135MM (this includes a $70MM payment for Janssen retention of U.S. rights to Imetelstat). In addition, Geron 8-K filed today indicates it has just signed an additional agreement on September 15th with Janssen for their remaining patent assets that calls for an immediate $5MM payout as well as additional $75MM in milestone payments for non-Imetelstat assets.

The Best News in This Early Look at Geron's Imetelstat Trials May Be That There Are No New Safety Concerns

What may be perhaps the best news to come from the early assessment is confirmation of Imetelstat relative safety which was supported by the FDA, lifting the full clinical hold on the drug in 2014 after some relatively minor concerns. This confirmation of safety and manageable risk will likely attract many new investors into the name and bring back those that were scared off after the initial concerns surfaced.

Conclusion

Fundamentally, Geron is a biotech firm trading at a market cap only slightly above 2x cash and securities with a very low burn rate with two later stage trials, each of which has multi-billion dollar sales potential. The additional agreement signed this past week provides further upside to this story. Of course, there are no guarantees of success and if the trials ultimately fail, investors will be left with a fraction of today's value. However, there are very few opportunities with the combination of cash availability, major pharma partnership, low cash burn rate and upside potential that I see here in Geron.

Disclosure: I am/we are long GERN.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The above is my opinion only. Investments in the stocks mentioned in this article should be done only after you conduct your own research.