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Henry McCusker
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Editor and Publisher ... Henry enters his twelve (12) year at RegMed Investors which aggregates, curates and creates bottom-line content of regenerative medicine and cell therapy news providing a "vetted" selection of relevant and high-impact synthesis. He was VP - Strategic Planning... More
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Scimitar Equity-Regenerative Medicine Investors
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Scimitar Equity Blog
  • GERN Had A Loss And Beat Revenue Expectations 0 comments
    Mar 13, 2013 9:21 AM

    Net loss was $15.9 M, or $0.12 per share

    Net loss was $15.9 M, or $0.12 per share, compared to $31.9 M or $0.25 per share, for Q4/11. Net loss for Q4/12 included restructuring charges of $2.7 M and Q4/11 charges of $5.4 M related to the discontinuation of GRN1005 and stem cell programs. Net loss for Q4/11 also included non-cash debt extinguishment charges of $1.7 M resulting from the repayment of the loan to the California Institute for Regenerative Medicine (CIRM).

    FY12, net loss was $68.9 M, or $0.54 per share, which included restructuring charges of $2.7 M, compared to $96.9 M, or $0.78 per share, for FY11, which included restructuring charges of $5.4 M and non-cash debt extinguishment charges of $1.7 M.

    Q4/12 revenues < license fees and royalties> increased to $689 K from $251 K in Q4/11. Interest and other income increased to $2.6 M from $204 K in Q4/11. On 12/12, GERN received $2.5 M in other income in connection with the assignment of certain intellectual property related to the telomerase activation technology. Operating expenses decreased to $19.2 M from $30.7 M in Q4/11. R&D expenses were $11.8 M, compared to $19.7 M for Q4/11; the decrease was due to reduced scientific supply costs and personnel-related costs as a result of the discontinuation of the stem cell programs and reduced costs for the manufacturing of imetelstat drug product resulting from the timing of manufacturing campaigns. G&A expenses decreased to $4.7 M from $5.5 M for Q4/11 primarily was due to lower non-cash stock-based compensation expense. Non-cash operating expenses were $2.7 M, which primarily included stock-based compensation, write-downs of excess lab equipment related to the GRN1005 program and expense for stock issued for services. Non-cash operating expenses for Q4/11 were $6 M, which primarily included stock-based compensation, write-downs of excess lab equipment related to the stem cell programs and expense for stock issued for services.

    • GERN ended 2012 with $96.3 M in cash and investments.

    FY12 Results: Revenues for FY12 were $2.7 M and $2.4 M for FY11; reflecting funding under a collaborative agreement and license fees and royalties.FY12, interest and other income was $3.1 M, which included the receipt of $2.5 M for the assignment of the telomerase activation technology versus $1 M for FY11. FY12 operating expenses were $74.5 M compared to $98.6 M for FY11. R&D expenses were $51.4 M decreasing as a net result of reduced scientific supply costs and personnel-related costs due to the discontinuation of the stem cell programs and reduced costs for the manufacturing of imetelstat drug product resulting from the timing of manufacturing campaigns, partially offset by higher costs for the GRN1005 program compared to $69.3 M for FY11. G&A expenses decreased to $20.4 M from $23.8 M for 2011. The decrease was primarily the net result of lower non-cash stock-based compensation expense, partially offset by increased legal and consulting costs associated with the intellectual property portfolio and the divestiture of the stem cell programs. Non-cash operating expenses for FY12 were approximately $9.1 M, which primarily included stock-based compensation, depreciation, write-downs of excess lab equipment related to the GRN1005 program and expense for stock issued for services. Non-cash operating expenses for FY11 were $25.2 M, which primarily included stock-based compensation, depreciation, write-downs of excess lab equipment related to the stem cell programs and expense for stock issued for services.

    Highlights and Developments:

    • In 12/12, Geron reported positive clinical results from the P2 trial of imetelstat, the telomerase inhibitor, in patients with essential thrombocythemia (NYSE:ET) who did not respond to or tolerate other therapies. The data, which showed durable hematologic and molecular responses in patients treated with imetelstat, suggest a relatively selective activity of imetelstat against the malignant progenitors driving ET, and provide evidence to support a potential disease-modifying effect. The P2 trial of imetelstat in ET was designed to provide proof-of-concept for the potential use of the drug as a treatment for hematologic myeloid malignancies, including myelofibrosis, myelodysplastic syndromes and acute myelogenous leukemias.
    • Based on the results from the ET trial, Dr. Ayalew Tefferi at the Mayo Clinic has begun an investigator-sponsored trial (NYSEARCA:IST) to evaluate the safety and efficacy of imetelstat in patients with myelofibrosis and determine the optimal dose and schedule for further evaluation. Geron is in the initial planning stages of a company-sponsored trial in myelofibrosis, which will be informed by data from the Mayo Clinic IST, if positive. In addition, Geron intends to expand its directed program of ISTs in 2013 to other hematologic myeloid indications, including acute myelogenous leukemias and myelodysplastic syndromes.
    • In 9/12, GERN reported an "unplanned interim analysis" of its randomized P2 trial in advanced non-small cell lung cancer (NSCLC) evaluating imetelstat as maintenance treatment following platinum-based induction chemotherapy compared to observation. The analysis suggested a modest trend of efficacy in favor of the imetelstat arm. Subsequently, in December, GERN reported the analysis of a pre-specified sub-group of NSCLC patients based on a retrospective measurement of tumor telomere length. This analysis suggested that patients whose tumors had short telomeres at baseline experienced an increase in progression-free survival when treated with imetelstat in comparison to patients in the control arm. The treatment effect was not observed in imetelstat-treated patients whose tumors had medium-to-long telomeres. GERN has been refining and evaluating candidate assays to prospectively measure telomere length in individual patient tumor samples. GERN recently completed an updated analysis that included a more mature follow-up of clinical data and a retest of patient tumor samples using a refined, prospective assay to measure telomere length. In this analysis, the magnitude of the treatment effect in patients whose tumors had short telomeres was not reproduced. Geron is evaluating the impact of this updated analysis on its plans for potential development of imetelstat in solid tumors, including NSCLC.
    • Andrew J. Grethlein, Ph.D., was appointed as Executive Vice President, Technical Operations, and as a member of the executive management team. Dr. Grethlein is a senior executive with over 20 years of biotechnology industry experience. Dr. Grethlein is overseeing the Company`s manufacturing and quality functions. Dr. Grethlein previously served in a similar capacity at Inspiration Biopharmaceuticals and was the Portfolio Management Team Leader for Hematology at Ipsen S.A.
    • Craig C. Parker was appointed as Senior Vice President, Corporate Development, and as a member of the executive management team.
    • Olivia Bloom, formerly Vice President, Finance, Chief Accounting Officer and Treasurer, was appointed as Senior Vice President, Finance, Chief Financial Officer and Treasurer.
    • Susan M. Molineaux, Ph.D., and Daniel M. Bradbury were appointed to the company`s board of directors.

    Stem Cell Divestiture: In 1/13, GERN entered into an Asset Contribution Agreement with BioTime (NYSE MKT: BTX) and BioTime`s recently formed subsidiary, BioTime Acquisition Corporation (NYSE:BAC), that provides for the divestiture of Geron`s stem cell assets to BAC upon the closing of the transaction, which is expected to occur no later than 9/30/13. Upon closing of the transaction, Geron will contribute to BAC its intellectual property, cell lines and other assets related to discontinued human embryonic stem cell programs, including the P1 clinical trial in patients with acute spinal cord injury, as well as its autologous cellular immunotherapy program. GERN will receive approximately 6.5 M shares of Series A Common Stock of BAC. Following the closing of the transaction, GERN will distribute the Series A BAC Common Stock received from BAC to stockholders on a pro rata basis (other than with respect to fractional shares and stockholders in certain to-be-determined excluded jurisdictions, which will instead receive cash on a pro rata basis).

    The Bottom Line: GERN had a loss and beat revenue expectations. The revenue beat is a positive sign to shareholders seeking better share appreciation . GERN's Q4 EPS of -$0.12 beats by $0.02. Revenue of $689 K beat by $189 K. GERN closed at $1.42 down -$0.03 or -2.07% on moderate 327.8 share volume and is … DOWN -$0.01 or -0.70% to $1.41 in after hours trading. The 50 day moving average is $1.51 while the 200 is $1.55. However, the short position is 4.90% of the 127.6 M float.

    I believe a "BUY" for this "cheap" stock … is in order as I have seen "re-appreciation" from 2/26 of $1.37 … and $96.3 M in cash as … news will be the share price motivator.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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