It has been a rollercoaster ride for Geron Corporation (NASDAQ:GERN) investors in 2014. In March, the FDA's decision to place a clinical hold on the company's essential thromobocythemia (ET) and multiple myeloma (NYSE:MM) studies and a partial clinical hold on the then investigator-sponsored trial of imetelstat in myleofibrosis (MF) sparked a huge sell-off. At one stage this year, Geron shares fell well below $2. Since then the stock has recovered strongly after the FDA lifted its clinical hold. And as we enter 2015, Geron's position appears to be stronger, especially after the agreement with Janssen Biotech Inc. to develop and commercialize imetelstat. The agreement has received HSR clearance this week.
The agreement has boosted Geron's cash position thanks to the $35 million upfront payment. During the Stifel Healthcare Conference 2014 held last month, CEO John Scarlett said that the initial payment from Janssen will cover Geron's 50% share of Phase 2 MF and MDS study costs. As per the agreement, Janssen has agreed to fund the remaining 50% of the costs of the two studies. With the initial payment, Geron now expects to end this year with cash and investments of $165 million. Given that the upfront payment will cover the Phase 2 study costs for MF and MDS and potential milestone payments from Janssen could cover future study-related costs, there is now minimal risk of dilution for Geron shareholders.
Further, Geron this month reported positive data from preclinical study of imetelstat activity in acute myelogenous leukemia (AML). The data supports clinical development of imetelstat in AML.
In the U.S. alone, some 19,000 patients are diagnosed with AML each year and around 10,500 patients die from the disease. The existing treatment for AML comprises of chemotherapy. In fact, the treatment has largely been unchanged in the last four decades. Although patients initially respond to chemotherapy, there is a very high risk of relapse as noted by Dr. Steven Lane of QIMR Berghofer Medical Research Institute in Australia. Dr. Lane and his colleagues at the institute co-authored the AML study with Geron scientists.
The preclinical study conducted by Dr. Lane and Geron scientists has shown that telomerase is essential for AML maintenance and recurrence/relapse after treatment. However, combining imetelstat with chemotherapy can potentially prevent a relapse.
As Geron enters 2015 on a more assured note, the three things to watch out for next year will be the MDS-RARS data from Mayo Clinic, the initiation of Phase 2 MF study and the initiation of Phase 2 MDS study. The Phase 2 MF study is expected to be initiated in mid-2015, while the Phase 2 MDS study is expected to commence by end of 2015.
If the MF study remains on the track and the clinical trials are successful, we could see imetelstat launched by the end of 2017 or early 2018. As I have noted earlier, the major risk is failure of the imetelstat trial, given that Geron is a one-drug company. However, the Janssen collaboration has once again highlighted the potential of imetelstat. It is the only drug with the potential to cure MF. Jakafi, which dominates the MF treatment market, can only relieve the symptoms of MF. That is also the case with other JAK2 inhibitors currently in development. While betting on a one-drug company always poses a risk, in Geron's case the risk is worth taking given the potential reward.
Disclosure: The author is long GERN.
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